Arbitrage is buying something in one place and selling it in another at a higher price at the same moment, for a profit with no market risk. In liquid markets it is done by institutions in microseconds, and none is left for anyone else. The "arbitrage" sold to retail traders is something different.
Latency arbitrage
A latency arbitrage program takes a fast price feed from an institutional source and compares it with a retail broker's quote. When the broker's quote lags the real market by a fraction of a second, the program trades against the stale quote, knowing where the price is about to go. The profit is real, and it comes from the broker, who is filling orders at prices that are already wrong.
Why it stops working
Brokers watch for it. The pattern is unmistakable: many very short trades, all profitable, clustered in the milliseconds around price updates. Every broker's terms prohibit trading that exploits quoting errors or latency, and the response is to cancel the profits, close the account, and sometimes keep the deposit. Brokers also add execution delays and last-look checks that neutralise the approach. A latency arbitrage EA works for a few days at a new broker and then does not, and the vendor sells it to the next buyer.
Other forms
Triangular arbitrage between three currency pairs, and arbitrage between two brokers' quotes, are sold on the same promise and fail for the same reasons: the discrepancies are too small and too brief to survive spread, execution and the broker's terms. "Hedged arbitrage" EAs that hold offsetting positions at two brokers are usually a way of collecting a bonus or a swap difference, and the bonus page and the swap page explain the limits of each.
A trader buys an arbitrage EA and opens an account at a small offshore broker the vendor recommends. In the first four days the account gains 30 per cent from 640 trades averaging eleven seconds. On day five the broker cancels every trade as a breach of terms, returns the original deposit, and closes the account. The vendor's forum has the same story from a dozen buyers, each at a different broker.
Any EA whose edge is described as risk-free, or as exploiting brokers, is describing a breach of the broker's terms, and its record, if any, ends when the broker notices. A legitimate strategy earns from the market and can be run at an FCA-regulated broker indefinitely. That is the test, and arbitrage EAs fail it by design.