Thread: Risk Free Arbitrage with Spread Betting

Originally Posted by ;

Why you don't need you? If everyday you are going to spend more earn on the haul that is long.

Should you allow both transaction open let us assume 3 month, you could end up paying 100$ rollover fees, along with your spread arbitrage won't even pay it.

Am I wrong? If yes, please clarify. Thanks

See post #37

Originally Posted by ;

According to the first post we exchange 1 Lot on every agent and choose a 150 Pip reduction.

Since I understand it example one utilizes a 1500 pip transfer

I modeled this method fairly carefully in Excel and showed it functions, but just when the price moves by 400-500 points finish even then you don't make much cash for the risk you are really taking. *

there's a risk you won't get both parts of the trade in place for an attractive enough pace. An individual may slip, or fail to place, particularly if the market is active. You also need to hold quite a huge place, maybe for a while and there's ar isk that one party can freeze your account or shut the trade, leaving you an unclosed part. If this happens when the market goes dramatically, you could wind up a hundred thousand, all to pursue a few thousand of profit. Finally, the company that you're dealing with may go bust, which can be hardly fanciful in today's climate.

So let us look at the numbers.

You will typically get 3 pips of disperse for GBP/USD (Notice that GBP/JPY includes a bigger spread and it is no more profitable). To get a #10/pip wager, you start # 30 from the hole off. Obviously, you could gamble by delaying placing both halves until the rates fit, or placing two limit requests, but that doesn't affact the arbitrage. You're simply taking a position in the market, which may go against you. Likewise, as one poster suggested, should you exit one leg early, this is effectively indistinguishable with terminating both legs then immediately placing a brand new leg in the preferred direction, therefore it doesn't actually alter the profitability.

The BBS won't let me post the Excel data nicely, but here is a summary.

Start with GBP/USD at 1.7869/1.7871 (i.e. 2 point spread). Place a #10 spread wager and sell the178,710 of currency. Currently model 5, 10, 100 tick moves and their negative counterparts and work out the internet PL.

5 -#40
10 -#40
100 -#34
200 -#18
300 #10
500 #97
1000 #491
1500 #1,123

-1500 #1,333
-1000 #552
-500 #103
-300 #11
-200 -#18
-100 -#34
-10 - #40
-5 -#40


As you can see, you are going to eliminate money the majority of the time. I looked at historic data and discovered very few days where you'd earn money, even if you moved to 3 day intervals and traded optimally (obtaining the high and low prices).

You also must factor in the costs of holding the position. If the SB provider chages a roll-over of half of the disperse, that eats into your profits also at #10 per night to get a #10 wager and a two pip spread. So, if it takes a week to get that 500 stage motion, you've still lost money.

I am not sure it is worth investing unless it is possible to get a complimentary roll-over on the SB side, or cover that price from the short sale curiosity. When I looked lately, holding a short GBP/USD place would really cost you, because of the way that brokers calculate the charges due, but it may vary by broker.

This makes it rather situational and restricts it to a restricted set of brokers and SB companies, some of whom may spot the arbitrage and shut your position together leaving you with a possibly large unhedged place. Given how long you may need to wait for the essential motion, you also must factor in the opportunity cost of linking up risk funds this way.

But I am open to emphasise that this remains a worthwile egy.

Regards
FoF.




* Before you tell me it is arbitrage and so risk-free, let me say I know a bit about the subject, having worked for investment banks in pricing and risk. Obviously, it is always possible that I have made a error in my calculations.

Originally Posted by ;

It was over a year ago where Peter created his 1000th article (it can be found 8 articles above this article). Then I congratuated him because of his achievement and... that he has not made a post since then!

Clearly it is irrelevant whether someone continues to create not, but I find it quite strange that someone could get to a nice round number like 1000 and then never post again!

Can it be just a coincidence that he caused it to 1000 and has not posted since? Or did that 1000th article make him reflect that he might happen to be spending too much time...

Well he is dead.

This is a really interesting system, to say the very least.

Hi,
I did not loe any spread betting company who doesn't charge rollover... This egy can not work in that circumstance.

Has any of you found a rollover free spread betting site?

thanks

Peter, on the short FX portion what do you consider opening both a long and short position and then when either strikes a stop, dropping the leg that is unprofitable . In the event the side loses this could limit the loss. . ?
There are many fx brokers today that support hedging in the same account. But I guess it may be dangerous because cost actions could turn around and your disperse trade would be uncovered

I think before coming to conclusion, we ought to demo this egy. The author is making money and he's nice enough to post it here. So we could get our hands dirty.

Originally Posted by ;

I think we ought to demo this egy before coming to conclusion. The writer is currently earning money and he is nice enough to place it. So we could get our hands dirty.

No,
As I stated at the start of the thread Mr P isn't the original writer, credit where it's due if this is really the man but I'll say again the original post was written by Roby Burns years back a really talented share trader who I've a lot of respect for. Here is the link to a system that the man does not use.

Because.... What would you think?

http://www.financial-spread-betting....adbetting.html

I'm thankful that he submitted it. If you that this article before he did why didn't you post it before him with appropriate credits. Credit to whoever the writer is but thanks to peter to get poating it