Is Triangular arbitrage profitable and can be executed?

anyone who has tried this trading strategy would advise me if it is successful or if I should give up on it ?

and if it will not work, would you please clarify why it will not work?


If you have couple millions $ probably this trading method will be profitable :wink:

I backtested it with a few “triangular currency groups” and it turned out to be no better or worse than any other system. Check out currency pair correlations and you will see that sometimes they move together and sometimes not. Not all of the movement is due to the strength/weakness of a currency so it is possible for AUD/NZD to move up and AUD/USD to move down with NZD/USD doing whatever it wants.

I wouldn’t mind doing some further reading on this system. Where can I find the details?

It is actually quite a simple system once you see it. Basically you pick 3 currency pairs that have the same 3 currencies in them…
Then you open positions such that you go both long and short on each currency. In the above case…
AUD/NZD - Long
AUD/USD - Short
NZD/USD - Long
If you look at individual currencies you will see that we have gone both long and short on each currency. The idea is that if the USD gets stronger you will gain on AUD/USD, lose on NZD/USD and see no change on AUD/NZD. What you hope for is that the change in the one you win is more than the loss in the one you lose. You try to pick a winner so in this case I might have seen signs on AUD/USD that show I should short it. Then you build the other two trades around that one. The other two trades are a safety valve for the one that you hope will win.

Triangle arbitrage is a low-risk form of currency traders profiting from exchange rate differences through algorithmic trading. To ensure profits, such transactions should be carried out quickly and on a large scale.