Risk Free Arbitrage with Spread Betting
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Thread: Risk Free Arbitrage with Spread Betting

  1. #1
    Ok here goes:

    I seen a while ago spread betting firms let you buy and market pairs and several allow you to choose which currency you need to use for each pip value. By way of instance if you open a long GBP/USD pip worth with brokers would be in USD. Together with spread betting companies you can have pips in GBP.

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

    Let me clarify:

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

    In the event that you marketed 100k GBP/USD using a regular broker and buy GBP/USD using a spread betting company for5 percent pip, no matter which way the market moved, you would gain.

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

    Should we look at the two position in Pound terms we have this:

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

    This would cause a gain of608.



    Now lets see what happens if cost moved to 2.15 instead:

    The extended would be#7500
    The short would be$15000

    Lets convert both rankings into Pounds:

    We have 7500 and$15000/2.15=#6976

    This would cause a gain of #524


    So as you can see, no matter what cost does, you win. These calculations do not variable in the spreads etc.. I dont think any FX plan is 100% risk free, agents slide orders especially during the news, agents can go bankrupt etc etc..

    I've used this egy for a couple months on the GBP/JPY with some fantastic results.

    The additional cost moves from the starting point, the larger the profit. When GBP/JPY dropped 9, it was excellent in July.

  2. #2
    Quote Originally Posted by ;
    Hi,
    I didn't loe any spread betting firm who doesn't charge rollover... This method can't work in that circumstance.

    Has any of you discovered that a rollover free spread betting site?

    Thanks
    you dont want one

  3. #3
    Quote Originally Posted by ;
    Peter, on the short retail FX portion what do you think of starting both a short and long position and then dropping the unprofitable leg when both long or short hits a halt. This could limit the reduction if the side loses. . ?
    There are lots of fx brokers now that support hedging in precisely the same account. But I guess it could be dangerous because cost actions could turn around and your disperse commerce would be uncovered
    you might do that, but that attracts extra risk into the equation. The idea of the plan was to be risk free, and it is.

  4. #4
    IG Index won't permit american taxpayers to open accounts. . .it appears others do however. Anyone know why this is? One would open with them but ca. Is it that they don't want trouble from taxation evading americans that could draw attention from the IRS? If an american using a bank account, FX broker and spread better in GB will be subject to profits taxes, I wonder? It isn't thought to be a futures contract right, at least as far as the SB side is concerned

  5. #5
    There has to be a loser in this game. Who would it be? SB or fx agent? Got a feeling money would be lost by SB for this particular egy.

  6. #6
    Quote Originally Posted by ;
    There has to be a loser in this game. Who is it? SB or fx agent? Got a feeling SB would lose money for this particular egy.
    Seems to me it would be considered a sort of operational arbitrage since it virtually has more related to shuffling cash and deciding pip worth than it does expecting the market. Allowed a basically even supply of trades that are lucrative between short and long ought to be sufficient to not raise any red flags.
    I know from experience that always losing on a retail fx account will attracted attention differently, you're only another trader as far as they understand. Is anybody currently losing? With modern networks and brokers they are more difficult to make the most of for retailers, although there are various kinds of arbitrage in different markets

  7. #7
    Http://en.wikipedia.org/wiki/Arbitrage

    an instance is when the SP 500 futures are moving down, but the underlying stock indior is still moving up. There is a arbitrage that large brokers can ch by exploiting temporary imbalances for a guaranteed profit. You know soon the loopholes continue in case you have ever watched how closely the futures are reacted to by the indior.


    Quote Originally Posted by ;
    Actually I still confused witfh arbrite trading, where can I receive comprehensive information about it??




    ===========================
    looking for http://free-corner-free-for-you.blogspot.com/??

    http://dewa-black-and-white.blogspot...bel/Make Money

  8. #8
    Thank-you for sharing this neat system, Peter.

    Query: If you made the most of the leverage available with your broker/ SB, would you acheive the very same results with smaller movements?
    Will increasing the ranking sizes on your case say tenfold allow you to make the similair profits out of 1/10 of this transfer in the currency pair (150 pips instead of 1500 in your case)?

    Ie as this is risk free, make the most of leverage, provided that you have enough margin to withstand a 150 pip transfer?

  9. #9
    Is there anyway to get a Demo Account at City Index?
    Can anybody confirm my thoughts?
    In line with this first post we trade 1 Lot on every agent and choose a 150 Pip loss. If we get 150 Pips DD so 2000 $ on every account should be sufficient. We gain 608GBP on the whole Arbitrage wich is around 1200$. Our account was =4000. That gives us aROI in the Arbitrage?

  10. #10
    Quote Originally Posted by ;
    you dont need 1
    Why you don't need you? If everyday you're likely to spend more get on the lengthy haul.

    Should you allow both trade open let's assume 3 month, you might wind up paying 100$ rollover fees, along with your spread arbitrage won't actually cover it.

    Can I wrong? If yes, please clarify. Thank you

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