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Forex Arbitrage Calculator for Palm
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Version
1.3
Forex Arbitrage Calculator allows to determine
risk free arbitrage opportunities on forex cross rates.
Forex Arbitrage is an arbitrage among real rates
and synthetic cross rates in different local markets.
For example, suppose a trader has accounts with forex
brokers in New York, Tokyo, and London. As far as
local quotes are determined by local players, there
are sometimes arbitrage opportunities among different
locations.
In our case the real rates are gbp/usd 1.6388 1.6393
(NY), eur/usd 1.1832 1.1837 (Tokyo), and the cross
rate eur/gbp is 0.7231 0.7236 (London)
In such situation exists risk-free arbitrage
opportunity with estimated profit equal to $13.1 on a
mini contract.
Indeed buying 100,000 EUR for $118,370 (10 mini lots
or a one standard lot), and selling 100,000 EUR for
72,310 GBP, and
selling 72,310 GBP for $118,501 gives zero exposures
in EUR and GBP with profit of $131.
Such arbitrage is possible if the trader's positions
are netting (clearing) by some "clearing house".
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