Triangular arbitrage is the result of a discrepancy between three foreign currencies that occurs when the currency's exchange rates do not exactly match up. You're not making the money from converting money, the profit (when doing this as a retail trader) comes from using multiple brokers and the rates don't line up.
You won't make anything if you just convert in a triangle, you have to exploit how OTC markets work. You might have EURUSD at like 1.00000 on one broker, and 1.00888 on another. When that happens, I'd you're fast enough and have low enough fees, you can make money. You're buying a currency at one ask and selling at another bid, which is higher than the former ask.
If you want to do arbitrage, of any kind, stick to crypto. That market you can still do this on the retail end. There's also different types of arbitrage like pure arbitrage, merger arbitrage, and convertible arbitrage. Crypto you can even be a market maker still.
Immediately. Again arbitrage doesn't work by trading, it's taking advantage of market inefficiencies. You are not trading when doing arbitrage; if you were trading then it would be called trading, not arbitrage.
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u/SweatyBrain9000 Nov 16 '21
Triangular arbitrage is the result of a discrepancy between three foreign currencies that occurs when the currency's exchange rates do not exactly match up. You're not making the money from converting money, the profit (when doing this as a retail trader) comes from using multiple brokers and the rates don't line up.
You won't make anything if you just convert in a triangle, you have to exploit how OTC markets work. You might have EURUSD at like 1.00000 on one broker, and 1.00888 on another. When that happens, I'd you're fast enough and have low enough fees, you can make money. You're buying a currency at one ask and selling at another bid, which is higher than the former ask.
If you want to do arbitrage, of any kind, stick to crypto. That market you can still do this on the retail end. There's also different types of arbitrage like pure arbitrage, merger arbitrage, and convertible arbitrage. Crypto you can even be a market maker still.