Currency arbitrage traders often use automated trading systems and algorithms, like the Bellman-Ford weight cycle identification algorithm, to identify arbitrage opportunities and to execute trades promptly and simultaneously in different markets.
What is currency arbitrage?
Currency arbitrage refers to the practice of taking advantage of exchange rate differences in various foreign exchange market venues to make a net profit. Currency arbitrage plays a significant role in global finance and contributes to forex market efficiency by facilitating pricing alignment across different currency pairs and markets.
How to execute a simple currency arbitrage trade?
To execute a simple currency arbitrage trade in practice, observant traders could look for situations where the exchange rate of a currency pair in one market differs significantly from its corresponding exchange rate in another market.
