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Question about triangular arbitrage in forex, hopefully get an answer here

kyawswarlin, Fri Nov 20, 2020 3:49 am

I want to know practice lot size for arbitrage in forex.

In theory if I want to triangulate EUR , USD , GBP

Let say here are their relationship.

EURUSD GBPUSD EURGBP

EURUSD=GBPUSD*EURGBP,

GBPUSD=EURUSD/EURGBP,

EURGBP=EURUSD/GBPUSD.

EURUSD Ask price is 1.17058

GBPUSD Ask price is 1.27390

EURGBP Ask price is 0.92345

Implied price calculation is as follow

EURUSD/GBPUSD = 1.17058/1.27390 = 0.91890 (implied value we get)

EURGBP = CURRENT MARKET PRICE is 0.92345 > 0.91890

So we can get profit if sell at higher price

BUY EURUSD

SELL EURGBP

SELL GBPUSD

I want to know is how much lot need to buy and sell to get profit in forex market.

How calculate profitable lot size for each pair.

At noon , when implied price less than current EURGBP price,

I traded as

1.5 Lot BUY EURUSD is + 171usd

1.5 LOT SELL EURGBP is -458 usd

1 LOT SELL GBPUSD is +137 usd

total is - 140 usd

So my lot size is wrong?

Arbitrage trade is simutaneously trade to get profit within short time.

How you trade arbitrage in market?
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