Forex Interest Rate Arbitrage
Definition of arbitrage
Arbitrage is simultaneous purchase and sale of the same commodity or stock in two different markets in order to profit from price discrepancies between these markets. Forex Interest Rate Arbitrage
For example, selling the share of Shell for a higher price in Amsterdam and buying the share Shell in London.
Through increasing globalisation of markets this type of arbitrage strategies have virtually disappeared as trading is conducted now with help of sophisticated automatic systems. There is no "Free lunch" any more!
Therefore arbitrage is often referred now to strategies in which there is an expected positive return.
Arbitrage strategies often entail a short position for
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