Cross Currency Triangulation: A Means to Trade and Profit

Code : INB0015

Year :
2011

Industry : Banking

Region : -

Teaching Note:Not Available

Structured Assignment :Not Available

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Abstract: The case is based on the fact that arbitrage opportunities are available in the foreign exchange market. A hypothetical case has been framed to understand the concept of the triangulation arbitrage strategy.

The entire case is focused on the spot foreign exchange market in which traders exercise their trade. Intra-day data of various currency pairs are taken to describe the triangulation strategy.

Therefore, this case study provides enough scope for debate on the arbitrage opportunity, trading process, and the role of transaction cost in the foreign exchange market.


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Pedagogical Objectives:

  • Understand trading in currencies in the foreign exchange market.
  • Understand the triangulation strategy using various currencies to earn profit.
  • Analyze the importance of transaction cost in the process of strategy formation.
  • Understand the role of interbank trading in determining the value of currency.


    Keywords : Currency; Triangulation; Trade; Forex Markets; Trading agent; Portfolio; Currency Pairing; Cross Currency Trading; Synthetic Currency

    Contents :
    Reason for Currency Triangulation Strategy
    How to Trade Cross Currencies


    Case Introduction >>


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