Forex Arbitrage
Forex arbitrage, or “two currency arbitrage,” is achieved when you buy a currency pair in an exchange that offers a lower price, and then sell the same pair in another exchange at a higher price. for example, assume you have accounts with two different brokers and they offer a slightly different price for eur/usd; broker x has an exchange rate of 1. 1010 while broker y has a rate of 1. 10. Arbitrage trading takes advantage of momentary differences in price quotes from various forex (foreign exchange market) brokers and exploits those differences to the trader's advantage. essentially the trader relies on a particular currency being priced differently in two different places at the same time. Forex arbitrage: two thousand years ago, roman gold and silver merchants became fabulously rich, transporting silver east to india and china, and bringing gold west to rome. they had a tremendous arbitrage opportunity in exchange rates. in rome, the gold-to-silver fair value ratio was 1:12, whi...