Forex Arb

Filed Under (Journal) by Casey on 07-12-2011

Forex Arb is the new forex arbitraging tool that came into the market just recently. Yesterday actually at this time of writing.

The idea of arbitraging in the financial market has actually been around for a long long time while forex arbitraging has also been around for as long as forex existed. The only thing was that there was never an avenue for retail traders to take that opportunity.

But now with the booming of forex broker left right and center, forex arbitrating to retail traders has become a reality.

I myself love the idea of arbitraging… Hey… I even toyed with 100PercentWeener.com which is a sport betting arbitraging software. Great way to take advantage of the price differences between two parties.

As usual… the sales page of Forex Arb is relatively attractive. If it wasn’t for my past experiences I would have already jump into the sales and cough up 2 grand for this piece of software…

It was precisely for my past experiences that I was skeptical with this site. Ok… my past experiences was with sport betting arbitrage but I think there are some similarities between both these two methodology of arbitraging.

So… from my limited experiences in arbitraging. I can only say a few things about forexarb.com.

Firstly, additional information is almost non-existences with regards to what is required. What Jason wants you to do is… Pay first… then we will let you know what is required. The sales page is like any other sales page… blah blah blah… how I came about blah blah blah… sad story about how i lost money… blah blah blah… how i discover this by accident… blah blah and more blah…

Show to you some video and some pictures… and than that is about it. BUY NOW button.

For 2 grand a piece plus if one is cynical and skeptical especially when it is something to do with forex. One has to wonder… I mean one has to really really wonder. Is it too good to be true? Can we actually make money from forex arbitraging?

Of course we can… theoretically that is…

Now… I have not taken the dive into this… but I can roughly imagine what is required and what are the possible aspect that one needs in order to be able to pull this off.

Now let me break it down to you or rather share with those of you who are interested in getting your hands on this ‘limited’ licences sort of software.

One: High set up capital

I am only guessing here but base on the picture from ForexArb. It seems that you have to buy from one broker while it sells to another broker. And I notice that the lot size is different.

Buy 300 lot with broker A and Sell 324 lot with broker B. Which means base on the initial price differences, no matter which way the market goes, you would have already lock in your profit from the start. And when you close out both these order with broker A and broker B after a very short time period. you will come out a winner on one end and loser on the other. But in theory your total account between both these brokers would be a few pips up.

Sounds great isn’t it?

So… which means… you need at least two broker and I am suspecting that Jason will recommend to you to have three to four broker. It is only logically seeing more broker means more opportunity to arbitrage.

Further to that, it means you need to fund 4 broker (going by the logic) and it will be nothing smaller than an ECN account. ECN account with any broker is no small deal. It is meant to be used by the big boys but it is very liquid and depending on the price feed that they are getting it will be opportunity.

Ok… if we assume that it is going to be ECN account. You will at least need 5000 per account trading at a minimum of 0.1 lot. I do not think you can start with 1000 per account. Reason is while one gain the other will need to lose. So if broker B is always the losing broker, it makes more sense to have more funds in broker B.

You will probably need 20k to start with this software on top of your initial 2k investment for the software.

Two: Fast and furious execution time

I believe this is highly important. Too slow means the price between the two broker will normalize itself and the price differences will be closed. I am assuming that I will be going for reputable ECN broker and not some bucket shop broker. Anyway, it is only true that the market price between demand and supply will meet soon enough. If you have a lousy VPS or internet connection system… opportunity like this will come to you but you might not be able to execute it.

Remember two orders must be place at the same time. Whether it will execute at the same time. It is totally a separate issue all together. If you are caught with one trade in while the other did not trade did not pull through due to price re quote then you are left hanging with a position which you must close it or trade it yourself properly.

Depending on where your VPS is or rather where the server is hosted at, and also where the server of your broker is will determine how fast you can execute these trades.

Brokers invest a lot of money on server and fast execution and they also invest a lot of money on server receiving data price feed. So one really needs to be plugged it.

In the real world, micro second is just a blink of an eye but in the forex world it is a matter of whether they make money or not… So time execution is a factor which I believe is important

Three: You have to stand watch.

It is interesting that the it says that it is an automated process. However, it’s definition is that it will automatically calculate and trade for you but… you need to click on the button ‘Enter Trade’ or ‘Exit Trade’

So if you are not there when the opportunity happens… All I or even Jason can say is… ‘TOO BAD. Boo Hoo Hoo…. ‘

Assumptions

As I have said before, I have not taken a dive into it but I can more or less figure it out base on logical thinking and some experiences in arbitraging and of course forex trading. The assumptions that I made is purely to help me justify my reason to not plow 2k into an ‘interesting’ product on the internet.

Jason is probably an internet marketer first and forex trader second. That is the assumption that I can only gather… That guy has quite a portfolio of products to name a few DelphiScalper.com, ForexPointAndFigure.com, ForexExecutorPro.com, ForexProfitAlerts.com and ForexImpact.com

Just to name a few… I am sure his supporters will jump into his new product. He maybe great and all that… But I don’t think (objectively speaking) I will want to waste my time with this.

But it will be interesting to see if this software actually works in forex. I know it works well in sport betting because sports betting broker does not have the kind of server speed as forex does and most of them work independently and are not connected to a common pool. Where else forex, is connected via demand and supply.

If any of you out there has bought it and tried it… Do share with me your screen shot and live account. I am waiting to be converted believer…

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