i wanna do some research about Triangular Arbitrage
Triangular Arbitrage is one of the forex trading strategies utilizing the imbalance value of the three currencies,
Example : GBP / USD, EUR / GBP, and the EUR USD,
the formula = GBP / USD x EUR / GBP = EUR / USD,
if the conditions are GBP / USD x EUR / GBP # EUR / USD,
then the triangular arbitrage opportunities arise.
This strategy practiced manually is difficult, because of the scarcity of opportunities that arise, and need the speed and timing to execute the order, because it is usually run by using softaware.
Here is my basic concept
But i will do it with a twist
Instead i am wait the triangular opportunity
i will enter trades blindly, no analyzing anything
and only with this lotsize formula
XXX/USD = 1
YYY/USD = Lot size depend of XXX/YYY Price
XXX/YYY = Lot Size depend of YYY/USD price
For Example GBPNZD Trade below
Triangular Arbitrage is one of the forex trading strategies utilizing the imbalance value of the three currencies,
Example : GBP / USD, EUR / GBP, and the EUR USD,
the formula = GBP / USD x EUR / GBP = EUR / USD,
if the conditions are GBP / USD x EUR / GBP # EUR / USD,
then the triangular arbitrage opportunities arise.
This strategy practiced manually is difficult, because of the scarcity of opportunities that arise, and need the speed and timing to execute the order, because it is usually run by using softaware.
Here is my basic concept
Triangular Arbitrage
Currency formula (CF):
GBP / USD (GU) x EUR / GBP (EG) = EUR / USD (EU
Description :
GU price multiplied by EG must be equal to the EU
The Triangular Arbitrage Formula(TAF):
GU x EG # EU
Description :
Triangular Arbitrage arises if:
GU price multiplied by the price of EG is not the same as the price of the EU at the time
Entry Rule:
1. If the EU CF> EU TAF by a margin of at least 12 pips then we open trades: EU buy, sell EG, & sell GU
2. If the EU CF <EU RTA by a margin of at least 12 pips then we open trades: EU sell, buy EG & buy GU
3. We will not open trades if the difference is less than 12 pips
Lot used in TAF for each currency:
1. EU = 1 x lot (mini, standard)
Examples 0.10 or 1.0
2. EG = appropriate price at the time GU x lot (mini, standard)
Sample price GU 1.6381 then we open 0:16 or 1.63
3. GU = appropriate price at the time EG x lot (mini, standard)
Examples EG 0.7210 price then we open 0.72 or 7:21
Exit Rule there are 2 options:
1. Take Profit with the following calculation: the difference in pips (ex: 12) - total third spread currency (ex: fx version 8 open) = profit (4) x lot (1) = $ 40
2. Exit when price is in conformity with the CF
Sample case Using tickmill brokers
Prices on the chart, namely: GU 1.6381, EG 0.7210 and 1.1823 EU,
with spreads are 1.3 for EURUSD, 1.7 for GBPUSD , and 2 for EURGBP
and then triangular arbitrage opportunity appeared, because GU x EG # EU.
Value EU CF is supposed to 1.1811 due to the smaller than EU TAF by 12 pips,
then we open trades sell EU, buy EG and buy GU
With the lot size EU 1,
EG 1.63 (according to the price GU)
and GU 0.72 (according to the price EG that time )
We will take profit formula pips difference minus the total spread, ie 12-5 = 7 x 1 lot = $ 70
Currency formula (CF):
GBP / USD (GU) x EUR / GBP (EG) = EUR / USD (EU
Description :
GU price multiplied by EG must be equal to the EU
The Triangular Arbitrage Formula(TAF):
GU x EG # EU
Description :
Triangular Arbitrage arises if:
GU price multiplied by the price of EG is not the same as the price of the EU at the time
Entry Rule:
1. If the EU CF> EU TAF by a margin of at least 12 pips then we open trades: EU buy, sell EG, & sell GU
2. If the EU CF <EU RTA by a margin of at least 12 pips then we open trades: EU sell, buy EG & buy GU
3. We will not open trades if the difference is less than 12 pips
Lot used in TAF for each currency:
1. EU = 1 x lot (mini, standard)
Examples 0.10 or 1.0
2. EG = appropriate price at the time GU x lot (mini, standard)
Sample price GU 1.6381 then we open 0:16 or 1.63
3. GU = appropriate price at the time EG x lot (mini, standard)
Examples EG 0.7210 price then we open 0.72 or 7:21
Exit Rule there are 2 options:
1. Take Profit with the following calculation: the difference in pips (ex: 12) - total third spread currency (ex: fx version 8 open) = profit (4) x lot (1) = $ 40
2. Exit when price is in conformity with the CF
Sample case Using tickmill brokers
Prices on the chart, namely: GU 1.6381, EG 0.7210 and 1.1823 EU,
with spreads are 1.3 for EURUSD, 1.7 for GBPUSD , and 2 for EURGBP
and then triangular arbitrage opportunity appeared, because GU x EG # EU.
Value EU CF is supposed to 1.1811 due to the smaller than EU TAF by 12 pips,
then we open trades sell EU, buy EG and buy GU
With the lot size EU 1,
EG 1.63 (according to the price GU)
and GU 0.72 (according to the price EG that time )
We will take profit formula pips difference minus the total spread, ie 12-5 = 7 x 1 lot = $ 70
Instead i am wait the triangular opportunity
i will enter trades blindly, no analyzing anything
and only with this lotsize formula
XXX/USD = 1
YYY/USD = Lot size depend of XXX/YYY Price
XXX/YYY = Lot Size depend of YYY/USD price
For Example GBPNZD Trade below