Cross Currency Triangulation: A Means to Trade and Profit
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Code : INB0015
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Region : -
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Reason for Currency Triangulation Strategy In most instances, exercising the triangulation strategy provides profits due to the presence of exchange rate disparities. Generally, currency trading takes place among the banks which quote the currency rates. A list of some international banks is given in table-4 of Appendix-I. A profit making opportunity exists in interbank and retail currency trade due to discrepancies in the exchange rates. The currency triangulation strategy can be exercised in various ways. Suppose a trader rounds a trade by buying two currency pairs and selling one for initially holding currency. The trader's profit depends on the timing of order execution and the exchange rate at that time... How to Trade Cross Currencies Trading in currencies, or Forex trading, can be considered to be as well-known as stock buying and selling to gain profit. Unlike in stock trading, currency trading involves the conversion of one currency into another. In the spot foreign exchange market, the profitable opportunities occur for very short periods as the exchange rates change very quickly. Therefore, exercising a triangulation strategy needs perfect timing... |
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