Forex Arbitrage - An overview on how to arbitrage on FX - Forex Trading

Spread Trading on Forex and futures

PathFinder Trader™ allows you to receive and merge quotes coming from different counterparts using the same underlying technology and contract or currency pair names. For example you can create and trade on a contract which is made by the spread difference between the EUR/USD delivered from our Currenex A Data Feed and the Currenex C Data Feed.

Build Arbitrage Contracts

You can build complex arbitrage strategies made out of different contracts or currency pairs. If you also have a futures account you can even create tradable arbitrage contracts by building a contract made out of a forex currency pair and the underlying future contract.

Smart Auto-Execution

If you are a system trader you can benefit from the platform’s auto-execution capability. You can design strategies which may generate orders to be sent to multiple ECNs or different contracts or currency pairs.

Strategies using combinations of positions, such as spreads, may be as risky as outright long or short positions. Please be aware of your margin when trading using these products.

Spreads Definitions

Intercommodity Spreads

Intercommodity Spreads are Arbitrage strategies developed by creating synthetic contracts deriving from 2 different contracts which are correlated because of their underlying asset.

With Pathfinder Trader™, not only you can create such spreads by creating synthetic contracts made of 2 similar pairs, but also by creating spreads made of two different type of contracts. For example, you can build a spread made out of the EUR/USD and the US dollar Index traded on the ICE.

Synthetic currency Pairs

You can build Synthetic Currency Spreads not offered by the liquidity provider. Assume you want to trade the JPY/MXN which is not available among the list of currency pairs offered.

You can easily build by selecting the USD/MXN on the first leg, and the USD/JPY on the second. Add the contract to your quoteboard to chart it or to trade it through the DOM.

Intermarket Forex Spreads

Intermarket Spreads are very popular among future traders. Thanks to the Multi Connectivity capability of Pathfinder Trader™, you can trade such spreads on forex too. An intermarket spread is a synthetic contract built using equal contracts offered through different exchanges.

With PathFinder Trader™ you can build Intermarket spreads by selecting equal forex pairs streaming from different liquidity providers.

Correlation Charts & Tradable contracts

Even if you are not a spread trader, you can take advantage of the unique capabilites to create synthetic contracts. Once created a synthetic spread, your contract will perform like any other in your quote board.

You can open it into a chart to build a correlation indicator, or to track price inefficiencies.

You can open the Scalper Book, to manually trade the contract, or you can even apply your Automated trading Strategies created using the Powerscript Language.