Wednesday, 9 February 2011

Forex Arbitrage Trading: A Good Trading Strategy Or A Bad Idea?

Forex arbitrage trading is one of the various strategies employed by day traders on the Forex markets. The basic concept is to profit from inefficiencies in the market that are present for only a short period of time. The nature of this kind of trading is complicated, especially for the beginner, and usually requires high levels of leverage to make any serious profit.
Using arbitrage involves trading in at least 3 different currencies, and 3 different currency pair combinations that you can derive from these. First I want to mention how a currency pairing looks. The US Dollar and Euro pairing can be expressed as EUR/USD, if you buy the EUR/USD then you are buying Euros in exchange for Dollars. The first currency in the equation

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