TheBluePrince
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I received an email today from a forex "guru" trying to sell a new arbitrage system. He claims his system searches multiple brokers for pricing anamolies that allow risk-free arbitrage profits. In theory if broker A has a bid for EUR/USD at 1.4210 and broker B has an ask for EUR/USD at 1.4200 you can buy Euros from B and sell them to A for a quick 10 pip profit. In practice I doubt that 2 brokers ever have a tradeable difference. Plus, I think you would need to already have an open account at each broker you are tracking to be able to take advantage of this situation. Is this new system total BS or do these arbitrage opportunities commonly exist?
Then there is another type of arbitrage which is the triad or multiple pair arbitrage. Here the prices of 3 or more currency pairs are out of balance to the extent that you can use A to buy B then use B to buy C and finally close the trade by using C to buy A. I've followed the bid/ask prices with a computer program in the past and never saw large enough differences to cover spread and commission and then have a profit left over. Has anyone else found that such arbitrage opportunities exist? I'm always willing to invest in some risk-free income, but other than my dynamite 0.5% CD I don't think they exist.
Then there is another type of arbitrage which is the triad or multiple pair arbitrage. Here the prices of 3 or more currency pairs are out of balance to the extent that you can use A to buy B then use B to buy C and finally close the trade by using C to buy A. I've followed the bid/ask prices with a computer program in the past and never saw large enough differences to cover spread and commission and then have a profit left over. Has anyone else found that such arbitrage opportunities exist? I'm always willing to invest in some risk-free income, but other than my dynamite 0.5% CD I don't think they exist.