The question of how to make money on currency arbitrage is now being asked by many. This is driven by the uncertainty of the markets, large commissions from brokers, as well as a number of other factors. It has now become easier to engage in arbitrage; in recent years, hundreds of new exchanges and payment systems have appeared with large differences in exchange rates, as well as convenient gbp usd chart, where everything is very clear.
What is currency arbitrage?
Currency arbitrage is the process of making money on exchange rate differences that exist on different exchanges, payment systems or banks. The essence of arbitrage comes down to the fact that a trader is looking for exchanges where the same currency pair is traded at different quotes. When he succeeds, he simply buys where the currency is cheaper and sells where it is more expensive. Ideally, this requires that the time lag between operations be minimal, so the purchase and sale of currency is often carried out simultaneously from different accounts.
At the moment, there are a large number of types of arbitration:
- intermarket – purchase and sale of assets on different trading platforms with large exchange rate differences;
- temporary – making a profit due to the delay in changing rates on different platforms or payment systems;
- conversion – earnings on the difference in exchange rates of currency pairs in different countries;
- banking – scrolling funds through accounts in different banks;
- interest rate – use of deposit accounts with different interest rates for arbitrage;
- cryptocurrency – application for arbitrage not only of traditional exchanges, but also of cryptocurrency ones.
Traders also distinguish mixed arbitrage using several of the above methods at once.
How to make money on currency arbitrage?
Today, complex multilevel schemes are being developed for currency arbitrage, using not only exchanges, but also banks or payment systems. Sometimes, for one circle, arbitrageurs carry out transactions through 3-4, or even more exchanges, using accounts and bank cards from different countries of the world.
In addition, financial monitoring services of large banks have long been closely monitoring those who carry out currency arbitrage. Therefore, in order to avoid card blocking, for arbitration it is necessary to use dozens or even hundreds of bank accounts, often referred to as drops.
To understand how to make money on currency arbitrage, you can and should experiment and gain experience. Such courses that are now actively conducted by brokerage companies, as well as private traders and investors. The latter have even invented more than one program for arbitrage of different currency pairs; they make it possible to automatically select sites with favorable exchange rate differences, and sometimes even carry out transactions on them.
Therefore, you should not be afraid to experiment, because only personal experience can tell you which currency pairs to use, where it is best to do it and what strategy to choose.
Moreover, today a huge number of conditions have been created so that anyone can become a trader, even if not a professional one, but at the amateur level you can also earn good money.