Arbitrage

[Chris]

Green = Instant profit through market discrepancy




Anyone do any trading?

[Callan S.]

Is that trading currencies?

What are the discrepancies?

[Jackolantern]

Be careful with that stuff. No idea what you are showing me, but I know a lot of these exploits and loopholes are simply plugged up with laws to nail people who exploit them

[Callan S.]

Depends. I don't know if I'm reading the numbers right, but if it's fractions of a cent each time, the rate you get by chasing them up might not be enough that they'd bother with a law.

[Chris]

Is that trading currencies?

What are the discrepancies?

A discrepancy exists between things which ought to be the same; it can be small but is usually significant. A disparity is a large difference between measurable things such as age, rank, or wages
-- http://www.thefreedictionary.com/discrepancy

Depends. I don't know if I'm reading the numbers right, but if it's fractions of a cent each time, the rate you get by chasing them up might not be enough that they'd bother with a law.

Multiply it by a few thousands and it makes a huge difference.

Arbitrage is not illegal.

http://en.wikipedia.org/wiki/Arbitrage

There is still a small risk involved. And that is the time it takes to send the order request from your computer to the markets computer. You have to hope you were first (internet connection speed).

Most markets use a transaction fee to try hold a balance, this formula is not as real as the arbitrage formula. Basically, markets should arbitrage themselves, which would be considered inside trading. The fact that they can't, means you can.

[Jackolantern]

Ohhhh, I have heard about this. People in the US have bought buildings right next to the market gateway servers so they could beat other people's requests

[Callan S.]

Well, I've got crap internet, but how do you do this magic, Chris?

[Sim]

Ohhhh, I have heard about this. People in the US have bought buildings right next to the market gateway servers so they could beat other people's requests

Lol, you serious?

[Jackolantern]

Ohhhh, I have heard about this. People in the US have bought buildings right next to the market gateway servers so they could beat other people's requests

Lol, you serious?

Absolutely. It is actually becoming a major problem in the US (according to some; others see it as fair game). Millions of dollars are being invested to try to shave a single millisecond off of requests to the stock market gateways. You want to be the first request when a discrepancy between markets appears, because the first arbitragers jumping on it could erase any potential profits for others.

This is just a piece of the iceberg for how the stock market works today. In the US, the stock market is mainly a battle between trading firm programmers to decipher other trading firm's algorithms and then beat or exploit them.

[Chris]

http://www.wikihow.com/Calculate-Arbitrage-in-Forex