Synthetic Symbols panel allows to create any non-standard instruments (symbols) or spreads that you can both trade and use as an indicator of the current market situation or market divergences.
Spread trading is a strategy that simultaneously creates a long and short position for different assets, in order to reduce the risk of the entire portfolio. Each side of the spread is called a "Leg", which is necessary to set the weighting factor for, i.e. the number of contracts for buy or sell. A market-neutral position, which does not depend on whether the market will go up or down is obtained with a proper selection of these coefficients.
General view of Synthetic Symbols in Quantower platform
For example, let's build a spread between different brokers within the same asset and see if there is a difference in prices. This is a classic example of Broker arbitrage.
- Open the Synthetic Symbols panel and click "Create Synthetic".
- Set the name for your spread and select a trading instrument.
- Click "Add Leg" to add another instrument. You can add an unlimited number of instruments by creating new "legs"
- Set the coefficients for each leg. In our example, we buy 1 lot of AUD/USD from the LMAX broker and sell 1 lot of AUD/USD from the OANDA broker.
- Click the "Save" button to calculate the received spread.
- Open the Chart panel and select your spread from the list of instruments.
Spread between different brokers within the same asset — AUD/USD
Spread between WTI and Brent Crude Oil