In the dynamic financial universe, technology companies lead the forefront by introducing innovative trends that challenge international exchange methods. Banks, insurance funds, and brokers compete fervently in the lucrative game of commissions, while participants, from clients to traders, seek ingenious ways to capitalize on emerging technologies designed to triangulate information and gain a monetary advantage, even by cents.
The resolution of cryptocurrencies and their exchanges has revealed intriguing practices on both sides, challenging the stability of the systems involved.
Technical Challenges: Slippage, Latency, and Additional Costs
In the realm of trading, traders face challenges such as slippage and latency, along with additional costs that come into play in the ongoing penny battle of this constantly evolving industry. By leveraging these differences and methods of operation, many traders, brokers, and clients seek to compare prices, technologies, and security levels to exploit any gap that allows them to profit not through technical, qualitative, or fundamental analysis, but through system failures.
Arbitrage: The Gap-Exploitation Technique
Arbitrage, a technique that exploits these gaps, manifests in various forms and methods. Both the money holder and the receiving company must have the appropriate means to identify and manage this type of arbitrage.
Hedging or Coverage Arbitrage: Intelligently Protecting Investments
Within financial strategies, hedging or coverage arbitrage stands out as a tactic that protects an investment by taking an opposite position in the same amount. For example, by buying gold (XAU/USD) at 2045.90, a trader can open a selling position to keep their floating constant, thus protecting the remaining funds margin. In high-frequency arbitrage, executing buy and sell operations within the same second through specialized software can generate profits in cents per trade, accumulating significant amounts as thousands of operations are opened and closed.
Commission Profit or IB Arbitrage: Challenging Financial Sustainability
This type of arbitrage occurs when companies like brokers, funds, and MLM commercials lack solid financial studies or trained personnel to carry out a viable commercial and financial analysis. In an example of transaction cost per lot traded in XAU, distributing 5 USD in IB with a cost per million of 10 USD could lead the company to a deficit if the charge per trade is lower than this cost.
Account Triangulation: Beyond Conventional Platforms and Companies
Contrary to common belief, arbitrage is not limited to different platforms or companies but can occur between types of broker accounts with specific market conditions in different books (A & B) with instant execution.
Swaps: Leveraging Asset Exchange Dynamics
Swaps, a potential source of income for companies dedicated to exchanging assets and financial symbols internationally, can become a Achilles heel without the necessary control technology. A revealing example shows how a trader could take advantage of a positive swap before the close of the international market, generating profits through minimal price fluctuations and avoiding possible losses.
