Thread: Risk Free Arbitrage with Spread Betting

Originally Posted by ;

I think we ought to demo this egy before coming to finish.

So that you would like anecdote to analysis? The market makers must love you. How many trials could be sufficient to convince? How the OP made cash (13 percent) is hardly surprising given the recent turmoil in FX markets. The GBP/USD rate did proceed out of $2 to $1.75, and it can be a gigantic 2500 point change, but it doesn't happen very often.

Anyway, I also tested the plan using two live demo reports. It lost money, as predicted by my investigation. I also experienced slippage and failure to place/close out the trades simultaneously. Now I think I could solve that to a certain extent with software, since I could easily set the FX leg with the API to various agents. However, no SB firm has an API so far as I understand. So you have to manually set 1 leg and then reach on the auto-trade for the other. It is not too bad if the market is silent, but if it's, then you likely aren't going to earn any money.

Note that putting lots of successive trades performs worse than putting one transaction and letting it ride to the end of a trend. The profits only collect as the two currencies diverge in their starting position, so the profits from 300 points to 400 are much better than from 0 to 100. This poses the question of when to close out the trades.

Funny how my threads keep coming back to life recently. I still use this particular egy. Not sure I wish to even try to convince anyone to use it. It was shared by me .

I use it on cable mainly. I had quite a long and brief from $2 and held it all of the way down to 1.8. I have made during the year with various bet transactions about 29 percent on quite a balance in total.

I have a swap free account for the brief so I create some on the attention also.

I create other transactions on that account so the broker is joyful.

I open both sides once the market is silent. . Slippage for me has been minimal. It is better when its silent 13, if the rankings can shut. Obviously this isnt always possible. Just make sure that you dont open or shut them. Use common sense.

Additionally, that financial spread betting site stole my content. Not that I'm troubled, I was happy to discuss it.

Originally Posted by ;

Not sure I wish to even attempt to convince anyone to use it. I shared it at no cost.

Do not get me wrong, I appreciate your sharing it. I'm not sure that I would have if I made money with it.

Originally Posted by ;

I have a swap free account for the brief so that I make some on the attention also.

I'm perplexed by this. FX brokers will charge the difference between the rates of interest for the two currencies. Let us take an example.

Extended 1,000,000 EUR/USD @ 1.2967 = 1,296,700 USD
EUR rate = 3.50 percent
USD rate = 5.25 percent
3.50 #8211; 5.25 = -1.75 percent
1,296,700* (-.0175) / 360 = -63.03 USD
The roll over of the trade will lead to a charge of $63.03 or $6.30 for each lot. This example is for a trade that is long, but you'd get that charge rather, if you're brief.

OK, now let's see what happens with a long GBP/USD standing and interest levels from http://www.bba.org.uk/content/1/c6/01/44/97/Sep08.xls

1,000,000 GBP/USD @ 1.7800 = 1,780,000 USD
GBP interest rate = 5.04 percent
USD interest = 2.14 percent
5.04 percent - 2.14% = 2.9 percent (note: this is positive)
1,780,000 x 2.9% / 365 = 141.42 USD

Therefore in a long standing you would get $141 per day, because US interest rates are greater than UK ones. However, in our case it is really is a position that is brief, and that means you'd pay that sum, rather than get it. So I really don't get how you make money. Unless, of course, you get a dumb FX agent who charges like they do to equity places, using a version of LIBOR-2.5 percent.

You use the term swap-free, so do you mean using an Islamic-style account, in which you pay a predetermined commission, but do not pay/receive interest? Because then you do not get anything on the brief position I'm still perplexed. Or do you mean that you then receive interest on the balance?

Further into the no-swap accounts, I found IBFX's method funny.

Https://secure.ibfx.com/Promotions/NoSwapAccount.aspx

The no-swap accounts are offered to those that are unable to make or pay interest due to religious reasons. These balances will make or pay a weekly fee dependent on the transactions which remain open after the market closes on Friday The no-swap accounts are offered to those that cannot make or pay interest due to religious reasons. These balances will make or pay a weekly fee dependent on the transactions that remain open after the market closes on Friday

Obviously I am sure it's pure coincidence that the weekly fee is calculated per currency pair and only happens to closely resemble the daily swap rates.

Still it seems as if you can save the swap as long as you shut the position on Friday just before the weekly fee is implemented and then re-open it on Sunday.

If an arrangement is opened following the Sunday open and can be closed until the Friday close, there's absolutely no debit or charge for charges.

Also beware of: Interbank FX reserve the right to revoke the Interest Free Trading account choice or alter the commission fee structure at any time without notice. Commission charges may be billed retroactively at Interbank FX's sole discretion

Originally Posted by ;

funny how my older threads return to life lately. This particular egy is used by me. Not sure I need to attempt to convince anyone to use it. I shared it .

I use it on cable mainly. I had quite a long and short from $ two and held it all the way down to 1.8. I have made about 29 percent on quite a balance in total during the previous year with various spread bet hedging transactions.

I have a swap free account for the short so I make some on the attention also.

I make other transactions on this account so the broker is joyful.

I open both sides when the industry is silent. . slippage for me has always been minimal. It is best if u can shut the positions when its silent also. Obviously this isnt always possible. Just be sure you dont start or shut them throughout the NFP. Simply use common sense.

Additionally, that financial spread betting site stole my content. Not that I am troubled, I was happy to talk about it.

PeterM,

It seems the previous post you made was your 1000th post. Congratulations!
Perhaps one day I'll also make it to 1000.


Topgun

Originally Posted by ;

ok here goes:
allow me to clarify:

Say in this stage in time, GBP/USD is $2.

If you marketed 100k GBP/USD with a normal broker and purchase GBP/USD with a spread betting company for5 per pip, no matter which way the market moved, you'd gain.

If price moves to 1.85 in the upcoming few months, The short GBP/USD position with all the standard broker would be$15000. The very long spread betting position would be-7500.

Should we look at both place in Pound terms we've this:

GBP/USD long #-7500
GBP/USD short $15000/1.85 (the speed at the time) = #8108

This would result in a gain of608.

It is totally virtual gain! If you live in UK - you get, but if you live in USA and use dollars, you have to convert pounts to dollars and your gains will disappear.

This is 50/50 game

Originally Posted by ;

It is totally virtual gain! If you reside in UK - you earn, but if you reside in USA and utilize dollars, you need to convert pounts to dollars and your gains will disappear.

This can be 50/50 sport

The exchanging of dollars to pounds through the interbank is wherever your gains will dry up.

Additionally, that figure was based on a 15 cent move? That's 1500 pips. How long can that take?

Originally Posted by ;

okay here is:

I seen some time ago spread betting firms allow you to buy and market pairs and many of them allow you to choose which currency you want to use for every pip value. For instance if you open a long GBP/USD pip worth with normal brokers would be in USD. With spread betting companies you'll have pips in GBP.

Assuming I'm fully understanding everything, This theoretically creates a risk free arbitrage opportunity.

Allow me to explain:

Say in this point in time, GBP/USD is 2.


In the event that you sold 100k GBP/USD using a normal broker...

Hi, is the same purchase eur/usd and sell eur/usd in 1 eur accounts and a single usd account?

Hello Peter,
Thankyou for your own egy you've posted. I prepared a file and also my assumption is the agent(FXCM)has a spread of 7 pips for GBP/JPY and IG Index has a spread of 7 factors for GBP/JPY.
The GBP/JPY Right Now is 148.36. Therefore I brief a standard lot of 100,000 at FXCM at 148.32 and also go at IG Index at 14839. The best price per point is 6.74 as per my own calculation. In order to breakeven, what I dont know is, the marketplace should move eitherways. Please note this excludes the rollover fees at both IG and FXCM Index which roughly works out to 10 GBP every day.
How realistic is it to make atleast 1000 GBP per month within this egy ? In order to create 1000 GBP profit, 1700 pips manners should move atleast.
In other words, what has been the monthly average movement of GBP/JPY ?

Originally Posted by ;

PeterM,

It seems the last post you made was the 1000th post. Congratulations!
Perhaps 1 day I'll also make it to 1000.


Topgun

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

Clearly it doesn't matter whether someone continues to create not, but I find it quite strange that someone would get to a nice round number such as 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 this 1000th article make him reveal and stop that he may happen to be spending too much time here? (Not that I believe it, but possibly he might have thought so).

Then again, perhaps it's just me that finds this strange....


Topgun