Disliked{quote} Hi, BubaYaga is right there. The thing is you can't use same lot sizes to create triangular hedge. Example: I took current rates in the morning: - EURUSD: 1.08593 - GBPUSD: 1.24682 - EURGBP: 0.87088 1. Buy 1 lot of EURUSD for 1.08593 -> you bought 108 593 EUR for 100 000 USD (+108 593€, -100 000$) 2. Sell 1 lot of GBPUSD for 1.24682 -> sold 124 682 GBP for 100 000 USD (-124 682£, +100 000$) 3. How many lots of EURGBP I need to balance hedge? From 1. and 2. we have on our account: (+108 593€, -124 682£) USD was balanced (-100 000$ + 100 000$...Ignored
part1.
ok, you are right with the size. as if they are never off temporarily, bcos all automatically hedge to the correct amount real time by algos...
ergo algos do run the market then!...i am not certain.
bcos once in a while there will be some large orders in 1 currency and not the other, so naturally some flows should be there to a perfect hedge idea time to time.
part2.
swap. as said, curious to see a triangle hedge resulting positive overall swap. if else a perfect hedge, just swap itself would deem it totally worthless.
ps. all from retail standpoints. banks dont pay the swap rates or commission retail does.
ps2. i am pretty sure there is direct exchange from EUR to GBP without involving a 3rd currency.
there is always, always another trade!!