Matrix for multiple currency trading

[bhairava]

Good day:

I am a Newbie. I would like to trade options on currencies. In 1994-95, I scanned through an article in an investing magaxine at Border's. The article ase forth a system to examine three currencies (i think simutaneously), using a matrix system. And this would determine if there was indeed opportunity for arbitrage.

Has anyone heard of such a system? Where can it be located?

Thank you.

 

[grantx]

Bhairava,

Look for Triangular Arbitrage in the attached document. Also look for on Google.

Briefly, you'll be wasting your time looking for arbitrage opportunities in fx - the market is too efficient for us mere mortals.

Grant.

 

[Rhody Trader]

As Grant indicated, that's definitely triangular arbitrage, which is something they teach in school, but which isn't readily applicable in retail trading. No broker is going to allow it on their own platform as their programs will keep the prices properly aligned. The only possible way to do it is through an ECN and/or using multiple brokers, but the resources required to be able to do it (monetarily and computer) make it extremely difficult to be worthwhile for a retail trader given the extremely small mispricings you'd be trying to exploit.