Secrets of Arbitration on Forex - Strategy
Main advantages of an arbitazh. In order to determine the existence of arbitration, it is not necessary to study the history of quotations. The current flow of quotations is enough to see inefficiency and have time to trade it. Since arbitration theory uses market inefficiency, the nature of quotations is also not important to us.
In general, no knowledge of technical or fundamental analysis is required to trade classical arbitration. Although during an unstable market (for example, news release) there are obviously more arbitration situations.
From a trader 's point of view, it is almost the ideal trading system:
• You don 't need to worry about the state of open positions, news and price gap;
• After successful entry, profits are almost guaranteed;
• Complex analysis of historical quotations is not required;
• The risk of failure is minimal and is most often a consequence of technical failure or poor execution.
The main problem is that in the high-liquid market (for example, FOREX) such inefficiency is already traded by someone else, or almost completely eliminated by the presence of a high-speed communication channel.
On the other hand, low-liquid tools impose their own limitations. This can include partial or simply long execution, slippage and, in general, everything related to the process of execution of warrants. In particular, this becomes a problem when the existence of an arbitration situation is limited to a very short period of time.
As a result, it turns out that the most affordable arbitration to an ordinary trader cannot provide high profitability, and the most delicious inefficiency of the market is eaten by large players.
Dawn of cryptocurrencies
There is no clear leader in the market of crypto and the main volumes are divided between dozens of different exchanges. At the same time, if the main turnover of Bitcoin falls on one exchange, the peak turnover on Ethrium, for example, may fall on quite another exchange. In general, it can be said that the market of crypto now has much more decentralization than Forex.
The green zone picture shows the current arbitration between crypto-currency exchanges on the example of BTCUSD. This means that there is real arbitration between sites in the market of crypto - you can buy currency in one place cheaper and sell elsewhere more expensive. On Forex 's liquid instruments, such a situation is very rare, and the reason for this is the desire for centralization.
Naturally, in fact, everything is a little more complicated, and the trade of such arbitration requires taking into account transaction costs. But even more interesting is arbitration between crypto currencies and traditional currency instruments. Some brokers have crypto currencies already traded on an equal footing with traditional FX instruments. This allows you to find arbitration situations without going beyond one site.
In general, crypto currencies are suitable for various strategies that have exhausted themselves on popular currency pairs. Arbitration has been and remains the most attractive strategy in terms of risk-to-profit ratios. The daily trade turnover of crypto is estimated at billions. It is a big actively developing market, and if you look for arbitration within the forex market, only there.