Hi
I have question about arbitrage
What conditions must exist to be profitable arbitrage?:33:
TNX,
There needs to be a price misalignment which creates an immediate profit when you execute a set of matched trades.
For example, if you buy EUR/USD at 1.1005 at one broker and simultaneously sell it at 1.1010 at a broker with a higher bid/ask quote, you make an instant arbitrage profit.
Exploitable arbitrage events happen all the time. They are easy to detect and even easy to profit from, even on a retail trading platform. Others will tell you differently, because they simply have chosen to believe a certain set of things without figuring out how to do it themselves. Question is, will your broker(s) and their liquidity providers let you keep your profits? Think of the value system of a broker whose main business model is to drain as many customer accounts into their pockets as they can. What will be their view of an uppity retail trader who is successfully detecting arbs and trading on them? You are an enemy because you are beating a crooked system they want to keep rigged in their favor. Another view of arbitrageurs is that they do a service to the market. Their arbitrage trading activity helps to correct mispricing events when they occur.