Arbitrage Forex Trading

Arbitration

Arbitrage is the simultaneous buying of one currency with a broker and selling it to another broker. To fetch, ask the price of the first agent must be lower than the bid price of the other agent. After buying the first broker and sell the second, waiting to catch the price and the closing piece rates. One deal will be profitable and the other a loss. Loss will exceed by 1-2 pips profit. This is our total profit.

RISKS IN ARBITRATION

Differences usually occur in a very short time, often in seconds. This time must be signed two deals - one for each forex broker. After leveling of prices, positions should be closed, which needed 2 more transactions.

Even in one of four all transactions should be requotes, it will put the market risk.

Example: We want to sell EURUSD at 1.3002 and buy at 1.3000. Sell ​​at 1.3002 with a broker, but other brokers and buy our Requotes of 1.3002. This leads to zero results. Decided to close positions to free margin. Close the long position without a problem, but closing the short position our broker requotes. We can swallow Example 1 pip loss or at the mercy of the market.

Does it make sense to arbitrate?

In his aforementioned classic look arbitrage involves taking a real risk. But it is meaningless in spazvalneto certain rules.

1. It should be dealing with niskovolatilen market - for example, in early Asian session after midnight local time. Then the average life of a quote is much longer than in European and Asian volatile session. Most inert is the market before the opening of Tokyo (3:00 EST In the summer, 2:00 EST in the winter. In Japan do not change during summer and winter)

2. It is desirable to use FOREX brokers with fixed spreads - eliminating the risk of widening the spread, which is common in illiquid markets.

3. It is recommended to trade with European and American crosses crosses - Majors and yen crosses are relatively liquid and volatile even in the Asian session.

The next issue will look scalped. For most traders it is simply trading for small profits multiple (perceptions of "small" varies between 2 and 20 pips). For my scalp is an enhanced version of the arbitration.