This is going to be a crappy question because I am using last year’s Schweser book. But one of the challenge questions (#13) asks for the arbitrage profit starting with $1 mil USD says:
So for this one the solution says to go from USD to GBP at the ask, then go from GPB to EUR at the bid, and then finally go back from EUR to USD at the ask. Fair enough, this makes sense to me.
But then there is an example within the Schweser text starting with 1 mil pesos:
Now, when you go around the triangle, you buy AUD with MXN at the ask, you sell AUD for USD at the bid, but now you sell USD for MXN for at the bid.
The part I bolded, I just dont understand. In the end of chapter question, we had to buy USD from EUR to get to the back of the triangular. But now in the question in the text, we had to sell USD for MXN at the bid to get back to the top of the triangle. Why the difference? I feel like I can do the triangular arbitrage fine without the bid ask spread, but I just cannot seem to find a way to do it with a bid-ask spread, everytime I think I understand, I do it wrong. Any help is appreciated.