enter their trades after a notable move has materialized, and they wait for signs of fading momentum to close them.: They seek to profit from minimal market inefficiencies, relying on significant purchase power and leverage to generate income. Arbitrage traders attempt to exploit trading opportunities while not alerting others of their discovery. Many market inefficiencies remain short-term, making technology essential for a successful arbitrage strategy.
Carrying firms will manage client orders and become the counterparty, using the market-making model. Introductory firms accept client orders but pass them on to carrying firms, earning a commission, which can result in multiple counterparties.