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"martingale" is a dangerous word in finance. "increasing risk" however is what my soil is made of ... but thats aan etirely different story that has nothing to do with this thread :) I'll probaly be a bit busy this week, but if somebody is willing to start a thread entitled "the merrits of...

Glad you are enjoying it mate :) ... knowledge is power and wisdom is the essence of our being :) I love discussing things with all of you even if it is purely for intelecual means. However, come Asian open, I'm out to make some real $$$$ :)

Whats next ? are we going to start a thread that is trying to prove that 1+1=2 ??

If you are just looking for an intelectual execise on a demo account, I hope this will help your understanding of FX mechanics. But please, for your account's sake, do not think you make any money doing this ! All you are doing is giving free money (spreads) to your dealer and tying up margin...

First off, I would be unwilling to call any of those trades a real "spread". FX is unlike other financials or commodities in so far that 1 pair + another pair with a common numerator or denominator will just transfer your net exposure to another pair. Second, yes, whatever you "see on paper"...

Ok, now that I see that there are at least a few guys out there that are able to answere there "FX arb" type questions, I'll end my advice here. If anyone who has been following this thread has still not understood that trying to arb FX is fruitless, I would strongly suggest resisting trading...

Oh, and did I mention long eur/usd spot + short eur/usd futures = zero market exposure ? Did I need to mention that ? ... I certainly hope that was obvious in everybody's mind.

Maybe I was not clear in the first place, or maybe I am missing something ? short eur/usd spot will gain interest. long eur/usd futures will decrease in value over time proportionaly to the interest gained on the short eur/usd spot position. .... short eur/usd spot + long eur/usd futures is...

Quite pure indeed. However, if I may venture to say, FX is truly the purest market of all. Definitely my favourite.

My mistake there. Sorry, opened my mouth before thinking. The only explanation I can see for you having a small profit on long eur/usd, short gbp/usd, and short eur/gbp is that the trades were nore xecuted simultaniously. Even a few seconds between executions could have made the difference...

...and moreover, they are not the base same size ...thus different pip values.

They were most certainly executed at different times ... even a second or 3 would explain the small profit.

There are indeed arbitrage opportunities between spot & furures from time to time. However, the "arb opportunity" is often a question of sometimes a single measly pip, and the "opportunity" oly may last a second or 2, and these opportunities are far and few between, and are only possible if you...

See my post concerning this question in the other thread : http://www.elitetrader.com/vb/showthread.php?s=&threadid=75992&perpage=6&pagenumber=4 « …. Ok, I know some of you are thinking "but futures prices are slightly different that spot prices" ... yes, true, but this is only...

1) long eur/usd + short gbp/usd + short eur/gbp = zero exposure (assuming the sizes on each leg are equal in value of the base). Such a trade would not be throwing me a curve ball, but rather donating free spreads to your dealer and using up margin to get zero exposure to the market. 2) As...

Speaking of commodities in general, there are resons why commodities can be less risky than stocks. 1) information on a single compnay can be falsified alot easier than information on a commodity. All it takes is a couple unscrupulous guys on the board to publish misleading/false financial...

Look at a nat gas chart. Nat gas has plunged more than oil.

"Since even professionals got hurt" :) 1) You think professionals have some superpower that makes them superior ? 2) I am in the fund industry myself (not that it has any bearing whatsoever on the quality of my decisions. I've seen alot of complete morons at institutional trading desks)

yes, definitely. Another simple point that screams "BUY" to me is a 50% drop in a near bee line. If need be, I could buy at a few increments down to 2.50 or so..... think it wil go that far South before bouncing ? ... I think not.

Stoking season is over now. inventories should be downhill from about here until april. other points incluse COT, weather, charts, contango. If I'm wrong on this trade, so be it. Somebody has to be on the other side of a good trade, right ? Anyway, doing fine so far and have solid risk...