Currency arbitrage.

A broader, in an economic sense, concept of the term Arbitrage involves making a profit from trading one product. In fact, this is nothing more than mere speculation.

Currency arbitrage is making a profit due to the difference in exchange rates, and for its implementation there does not necessarily have to be an exchange change in the value of the monetary unit selected for the operation.

Carrying out this type of transaction is considered completed if the reverse transaction in relation to the first transaction occurs.

There are several options for currency arbitrage.

Territorial.

Profit is obtained due to the difference in price for the same currency in different banks, regions or countries.

When you can buy currency in one place cheaper and sell it in another, but more expensive. For example.

The minimum price at which you can buy a US dollar in Moscow is 27 rubles per US dollar.

And in Kaluga, this currency can actually be sold for 29 rubles per unit. As a result, the profit from an operation of 1 million dollars will bring its organizer 1 million rubles.

This option of currency arbitrage is possible due to different amounts of demand and supply of currency.

Based on this example, we can say that in Moscow there is an excessive supply of US dollars, while in Kaluga there is an increased demand. Temporal.

As you know, the exchange rate never stands still; prices constantly change in the foreign exchange market.

This is the least expensive way to make a profit from currency trading; to implement it, you just need to buy a certain currency and wait for its rate to go up.

Temporary currency arbitrage is presented in a more extensive manner when trading on the Forex market.

If in ordinary life you can only buy a certain currency in the hope that its price will rise, then there are two possible transaction options - buy or sell. Which significantly expands your income generation opportunities. When selling, a Forex trader opens an order to sell a specific type of currency in a certain volume, without necessarily making the actual supply of money.

After some time, when the rate drops, he buys this currency at a cheaper price and closes the previous transaction. The entire operation is carried out using one order. You can read more about how to trade Forex in the article “ Playing Forex or making money on the exchange rate .”