Triangular Arbitrage - page 3
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very interesting concept, if somone can make indicator for mt4 calculating this FPI it would be nice
1.1840 (EUR/USD) * 1.3145 (USD/CHF) * (1 / 1.5565) (1 / (EUR/CHF)) = 0.999915194
Ths was upload on kreslik forum today.
Triangular EA! can any one develop EA to do triangular arbitrages
The process of converting one currency to another, converting it again to a third currency and, finally, converting it back to the original currency within a short time span. This opportunity for riskless profit arises when the currency's exchange rates do not exactly match up. Triangular arbitrage opportunities do not happen very often and when they do, they only last for a matter of seconds. Traders that take advantage of this type of arbitrage opportunity usually have advanced computer equipment and/or programs to automate the process.
As an example, suppose you have $1 million and you are provided with the following exchange rates: EUR/USD = 0.8631, EUR/GBP = 1.4600 and USD/GBP = 1.6939.
With these exchange rates there is an arbitrage opportunity:
Sell dollars for euros: $1 million x 0.8631 = 863,100 euros
Sell euros for pounds: 863,100/1.4600 = 591,164.40 pounds
Sell pounds for dollars: 591,164.40 x 1.6939 = $1,001,373 dollars
$1,001,373 - $1,000,000 = $1,373
From these transactions, you would receive an arbitrage profit of $1,373 (assuming no transaction costs or taxes).
Absolutely not, add in the spread and this will not work whatsoever.
There is a whole thread devoted to this subject of Triangular Arbitrage, or Fractional Price Inefficiency here:
http://kreslik.com/forums/viewtopic.php?t=307
Absolutely not, add in the spread and this will not work whatsoever.
there is no gaurenteed method that always works but trying few out of box ways to trade wont bring any harm
The process of converting one currency to another, converting it again to a third currency and, finally, converting it back to the original currency within a short time span. This opportunity for riskless profit arises when the currency's exchange rates do not exactly match up. Triangular arbitrage opportunities do not happen very often and when they do, they only last for a matter of seconds. Traders that take advantage of this type of arbitrage opportunity usually have advanced computer equipment and/or programs to automate the process.
As an example, suppose you have $1 million and you are provided with the following exchange rates: EUR/USD = 0.8631, EUR/GBP = 1.4600 and USD/GBP = 1.6939.
With these exchange rates there is an arbitrage opportunity:
Sell dollars for euros: $1 million x 0.8631 = 863,100 euros
Sell euros for pounds: 863,100/1.4600 = 591,164.40 pounds
Sell pounds for dollars: 591,164.40 x 1.6939 = $1,001,373 dollars
$1,001,373 - $1,000,000 = $1,373
From these transactions, you would receive an arbitrage profit of $1,373 (assuming no transaction costs or taxes).Very interesting.... so did you test it ? what kind of EA for that case ? it' kind of SWAFT.... Keep informing us the application of your method ...
GBU
Nyoman Ramayanta
This method sounds promising and is in fact practicable. The problem it that you need a broker that supports fractioal lots to create a perfectly "flat" order. The only one I know that supports this is OANDA, that doesn't support Metatrader. Another reason why this method doesn't work here is that most Brokers have fairly high spreads in order to pay for the Metatrader-license :-) Oanda offers very tight spreads that are needed for this strategy to work because profits are small - but risk-free!
-> If you're willing to trade this method manually and spend some time with it then trading those Rings can be profitable.