The traders are always on the lookout for trading strategies which are risk-free or involves minimum risks. Out of the many strategies the strategy related to arbitrage are considered to be the best strategy. The arbitrage technique is good but it requires a very fast response from the side of a trader so that the real benefit from the arbitrage technique can be taken. Thus automated trading is an option which can fetch the best results with arbitrage technique.
The automated trading is a system in which a computer is used to trade. The buy and sell calls are placed when the rules of the strategy programmed are executed. The automated trading involves the programming of strategy in the computer and the computer will take automatic decisions when the rules are met. Due to this automation, the automated trading provides a very fast response. Thus as soon as the rules are met, the buy and sell calls are placed in fractions of seconds. Such type of fast response is not possible by human beings as they have their natural reaction time.
The arbitrage like the interexchange arbitrage can be practiced using the automated trading platform. In case of this type of arbitrage, the stocks which are having a difference of price on the two exchanges are selected and Stock on one exchange is bought and on other exchange is sold to book a fixed profit. As the price of the stocks changes in the fraction of seconds an automated trading platform can help the trader to trade effectively and book good profit