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?
Re: Question about triangular arbitrage in forex, hopefully get an answer here
2A triangular arbitrage strategy exploits inefficiencies between three related currency pairs, placing offsetting transactions which cancel each other for a net profit.
A deal involves three trades, exchanging the initial currency for a second, the second currency for a third, and the third currency for the initial.
During the second trade, the arbitrageur locks in a zero-risk profit from the discrepancy that exists when the market cross exchange rate is not aligned with the implicit cross exchange rate.
A profitable deal is only possible when a market inneficiency arises and execution times are small.
Currency pairs you can trade with:
Points:
A deal involves three trades, exchanging the initial currency for a second, the second currency for a third, and the third currency for the initial.
During the second trade, the arbitrageur locks in a zero-risk profit from the discrepancy that exists when the market cross exchange rate is not aligned with the implicit cross exchange rate.
A profitable deal is only possible when a market inneficiency arises and execution times are small.
- Theoretically, is a zero-risk strategy
- It is NFA/FIFO compliant
Currency pairs you can trade with:
- EURUSD, EURGBP and GBPUSD
- EURUSD, EURAUD and AUDUSD
- EURUSD, EURNZD and NZDUSD
- EURCHF, EURUSD and USDCHF
- EURCAD, EURUSD and USDCAD
Points:
- The strategy is neutral to gaps, swings and stop-hunting
- Trade at least with 0.50 lots: this allows to hedge deals with a 98% accuracy.
- If you trade with less than 0.50 lots, the amount of trades closed at a loss will increase.
- These users thanked the author mosape for the post (total 2):
- kyawswarlin, Jimmy
Re: Question about triangular arbitrage in forex, hopefully get an answer here
30.5 lot for all pair?
0.5 lot buy
0.5 lot sell
0.5 lot sell
?
0.5 lot buy
0.5 lot sell
0.5 lot sell
?
Re: Question about triangular arbitrage in forex, hopefully get an answer here
4like this picture attachedkyawswarlin wrote: Fri Nov 20, 2020 4:18 am 0.5 lot for all pair?
0.5 lot buy
0.5 lot sell
0.5 lot sell
?
Re: Question about triangular arbitrage in forex, hopefully get an answer here
5Check this item too
Re: Question about triangular arbitrage in forex, hopefully get an answer here
6EURUSD 1lot
EURGBP 0.8lot
GBPUSD 1.4lot
Correct answer
EURGBP 0.8lot
GBPUSD 1.4lot
Correct answer
- These users thanked the author kyawswarlin for the post:
- Jimmy