Thread by @JacobLcmarkets

Spread #Forex #Trading. How to make money from #FX #markets?

Greetings Client,
LC Digital is regulated as #digital #investment bank in #Canada. I would like to explain you about our profitable strategies platform.

Forex trading is all about attempting to profit by anticipating the price direction of a currency pair. But what if you could profit from the Forex market without having to do this?

There are a number of 'market-neutral' Forex trading strategies which exist and Forex arbitrage trading is one such method. But what is arbitrage trading in Forex? What are some examples of Forex arbitrage strategies? In this article, we answer these questions and much more!

What Is #Arbitrage #Trading?
Forex arbitrage is a form of trading where traders seek to profit by exploiting price discrepancies between similar trading instruments.

Arbitrageurs, traders who engage in arbitrage, buy in one market, whilst simultaneously selling an equivalent size in a different but related market. They do this with the aim of taking advantage of price divergences between the two.

Sometimes, in financial markets, products that are effectively the same thing, trade in different places or in slightly different forms. For example, some large companies are listed on more than one stock exchange.

Theoretically, as the shares on each stock exchange all belong to the same company, they should be priced equally.

However, in reality, the flow of information to all parts of the world is not instantaneous and, furthermore, markets do not operate with complete efficiency.

Therefore, when both stock exchanges are open, it is possible that the share price may differ between them. The first person to notice the price difference could, buy the stock on the exchange with the cheaper price,

whilst selling on the exchange with the higher price and, in doing so, secure a profit.

Arbitrage is not an illegal practice. It is a perfectly legitimate trading technique and could, in fact, be seen as helping to improve market efficiency.

This is because, once the arbitrage opportunity has been identified and exploited, the market should begin to automatically correct itself.

What Is Arbitrage Trading in Forex?

Now that we have answered the question ‘what is arbitrage trading’ in general terms, let's focus specifically on explaining what arbitrage trading is in Forex.

Essentially, traders seeking to engage in Forex arbitrage trading are doing the same thing as described above. They aim to profit from purchasing a cheaper version of a currency, whilst simultaneously selling a more expensive version.

A Forex arbitrage trading system may operate in a number of different ways, but the basics are always the same. Forex arbitrageurs look to exploit price anomalies for profit.

One approach may involve looking for discrepancies between spot rates and currency futures. A futures contract being an agreement to trade an instrument at a fixed date in the future for a predetermined price.

Forex broker arbitrage may occur when two different brokers are offering different quotes for the same currency pair.

However, in the retail FX market, prices between brokers are normally uniform, meaning that this particular arbitrage strategy in Forex tends to be limited to the institutional market.

Bitcoin Spot Futures Arbitrage

Forex Arbitrage Strategies:

#Forex #broker #arbitrage is not the only type of opportunity in the spot market though. One Forex arbitrage strategy involves looking at three different #currency pairs.

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