This has been driving me crazy for a while. I can easily manage the arbitrage calc for cross currencies if one fx rate is given for each pairing – but keep screwing up when bid-asks are introduced. The Schweser “Up the bid, down the ask” concept isn’t clicking. Anyone have a good explanation on how to remember / calculate these questions?
Assume you get ripped off. When you are selling, you receive the lower (bid). When you are buying, you pay the higher one (ask). So always choose the rate with which you are off the worst.
Go where you get SCREWED more…
cpk123 Wrote: ------------------------------------------------------- > Go where you get SCREWED more… It works in currency AND love triangles.
What’s the quickest way, when introduced with three sets of cross rates, to determine what the arbitrage opportunity should be (e.g. buy versus sell)? I’m still looking at the rates and going… hmm… let’s see… then working my way around the calcs. If I get a negative number I go “hmm… probably should have gone the other way”.
there is no quickest way… no shortcuts.