Triangular arbitrage

[victorycountry]

The forex folks have convinced themselves that being short and long an identical position is "arbitrage", probably what mr. ForexGrowth is thinking of.

That's not an arbitrage. It's assuming that there is no arbitrage
To make a profit, one needs to buy low and sell high but this isn't taking the advantage of an arbitrage condition. This is just making a profit through spread.

To take the advantage of arbitrage opportunity, one needs to know the intrinsic value of a currency pair

 

[quant1]

If you do a triangle between USD, EUR, GBP your main risk is that you will slip and get values that don't satisfy the arb condition. You're still completely hedged once the total transaction is complete. In practice, unhedged times are as low as micros as are these arb opportunities. This is why retail can't really trade here.

 

[ElectricSavant]

I never meant actual arbitrage, of course a retail trader can't trade for microseconds. Rather, can one use the movements of any of the above mentioned pairs as a leading signal for the related pairs? Something akin to intermarket correlations, or statistical arbitrage.

until there is a reset....

 

[ElectricSavant]

Since any triangle arb would only last microseconds, how could it possibly provide you a leading indicator? I think you're throwing around a bunch of words without fully understanding the meaning behind them. It's very possible that there are statistical arbs between currencies. Those have nothing to do with the concept of triangle arbitrage any more than they do with the phases of the moon.

Sig..why don't you let him do the work? throw up some charts and observe a forth chart of your choosing. I know a trader that made a living off of non-logical discovery (forgot his name)...well I once read you could throw a dart at a stock symbol and make money too (if you traded correctly)...lol haha maybe I wrote that somewhere

es