What is two currency arbitrage?

Two-Currency Arbitrage: Two-currency arbitrage focuses on exploiting the price differences between two currencies. Traders identify brokers offering different spreads for a currency pair and execute trades to profit from the mispriced rates.

What is forex arbitrage?

Forex arbitrage is a risk-free trading strategy that allows retail forex traders to profit without open currency exposure. This type of arbitrage trading involves buying and selling currency pairs to exploit pricing inefficiencies. Arbitrage opportunities often arise during news events, when price quotes experience volatility.

How does currency arbitrage work?

In a currency arbitrage maneuver, a trader could convert one euro into dollars with Bank A and then seamlessly switch it back into euros with Bank B. This strategic move results in a profit of 1/8 euro, excluding trading fees. The instantaneous execution of these transactions is pivotal for ensuring the risk-free nature of arbitrage.