Almost every day our customers ask you about which one software is more profitable Hedge (2-legs) arbitrage or Locking arbitrage. Locking arbitrage software as well as hedge arbitrage software can be used both on FIX API accounts (no other software is required) or on MT4 accounts.
If you want to use Lock arbitrage on MT5 account, you need to buy different product: “Lock Arbitrage for MT5”. If you want to use Lock or Hedge arbitrage on cTrader – you need to buy cTrader connector and use it together with lock or hedge arbitrage software.
So what's the difference between these products. Locking arbitrage compares price between fast feed and 2 slow accounts with lock orders. It means that this software works like latency arbitrage but on 2 accounts (the same broker or 2 different slow brokers) for locking purposes. Lock gives opportunity to leave order open for long time and camouflages arbitrage trading activity. It means that arbitrage situation appears due to the fact that fast broker connected to more faster quotes source via more faster bridge, then slow broker.
Fast feed is not involved in Hedge arbitrage trading algorithm. Software compares prices between 2 different brokers.
It means that arbitrage situation appears due to the fact that brokers are connected to different pools of liquidity.
At first sight it seems that the hedge arbitrage is more hidden from the broker for the reason that software opens order based only arbitrage situations due to the price difference between the liquidity providers are involved, but it is not true. On high volatility market (for example during the news period) software will open orders based on the price difference appears in the result of different latencies of bridges. The number of such arbitration situations caused by the difference in bridges latency will prevail when using MT4 broker vs FIX API1 Broker. This percentage can be lowered by not trading during the period of high impact economic news. But there is a more correct way to do this: use FIX API Broker vs FIX API broker.
So what is the conclusion from the above: for my opinion if you plan to manage capital up to 10k it is better to use locking arbitrage, because this software works very stable on MT4 accounts and FIX API accounts as well.
For accounts with large deposit, we can recommend Hedge (2-legs ) arbitrage with 2 (or at least one FIX API Account).
1- Do not worry, there is nothing complicated to use FIX API. It's just another than MT4, but faster protocol for institutional clients and financial organisation. We will recommend brokers who offer fix API from $500 deposit. We also will help you set up software with FIX API accounts.