Arbitrage Pricer ! what strategy is ?

[sjfan]

It would really take completely brain dead dealers to let this happen. There might be lots of scammy bucketshops around, but they aren't in business because they can't post the right quotes that are in their favor.

I'm sure once in a long while you'll find two dealers who are out of line... maybe....

But the kind of return that the shill is posting is stupid. In order for this arb to generate steady returns, there would have to be a steady supply of dealers who are losing money.

Quote from intradaybill:

Sounds too easy...

 

[Sushi]

No that's bad logic. Prices that don't match up don't mean dealer is losing money. Gotta remember rule #1. Only thing dumber than a forex dealer is their clients.

Meaning very few if any are arbing this way

 

[sjfan]

If you can arb between two dealers, that means the two bid ask pairs are crossed, which means at least one of the dealers is giving you a price better than you should get, and therefore he's losing money (in terms of actual opportunity cost).

Okay, look - we can all agree that retail fx dealers are scam. But i for one don't think they are actually stupid. The customers, on the other hand...

Quote from Sushi:

No that's bad logic. Prices that don't match up don't mean dealer is losing money. Gotta remember rule #1. Only thing dumber than a forex dealer is their clients.

Meaning very few if any are arbing this way

 

[stevegee58]

On the Oanda message boards talk periodically comes up about "naughty" trading. This is believed to refer to latency scalping; i.e. taking advantage of differences in quote delivery times among several brokers. Michael Stumm, the main Oanda guy, has occasionally weighed in on this without actually going into technical details. It apparently involves just what's being discussed here. Oanda considers it cheating and will bust your trades if they detect it's going on. This busting has happened in the past, which usually triggers a blast of negative postings by the perpetrator after the fact.

Latency scalping is explicitly forbidden in the Oanda user agreement. I assume that other fixed spread retail brokers have similar language in theirs.

 

[atticus]

Quote from Sushi:

Meaning very few if any are arbing this way

Is the stupidity on this thread germline or acquired? You honestly believe that you can routinely beat dealers this way?

 

[Sushi]

It happens all the time. Sorry your out of the inside loop

Only thing dumber than dealers is thee clients. Geeeez. Gimme a break!

 

[Sushi]

Just like that said option arb was impossible when a few were making a mint doing the impossible. Same thing with this dealer arb. Our computers crush what dealer had. They stand no chance. 50 feeds millisecond

 

[atticus]

Quote from Sushi:

Just like that said option arb was impossible when a few were making a mint doing the impossible. Same thing with this dealer arb. Our computers crush what dealer had. They stand no chance. 50 feeds millisecond

I was the guy that discovered the Oanda option arb, and it cost Oanda 6-figures before they shut it down. Nobody outside of my group made a dime off of it. They didn't locate the error, they simply priced the market in ALL forward-starts at 5x40% vol.

My point is that simple crossing arbs are not available. Your computers, wheeeeeee. Please produce one spot-feed which was exploitable in the past.

 

[Sushi]

Since I no longer in business. Here is a classic example. Gft when day switched to mini contracts. The opps ain't always were ya think they is

 

[TSGannGalt]

Quote from atticus:

I was the guy that discovered the Oanda option arb, and it cost Oanda 6-figures before they shut it down. Nobody outside of my group made a dime off of it. They didn't locate the error, they simply priced the market in ALL forward-starts at 5x40% vol.

My point is that simple crossing arbs are not available. Your computers, wheeeeeee. Please produce one spot-feed which was exploitable in the past.

I don't see or hear about intra-broker arbitrage these days. Last one we exploited was about 2+ years ago between Currenex, FXAll and SaxoBank. The cause of the exploit:

1. A flaw in one of the broker's FIX Gateway.

2. The dealers are stupid.

3. We suspect that the broker's volatility based pip spread logic was broken.

The model got killed in 6 months but happily made money off it.