FoxerFX wrote:1. you have reinvented the wheel which has name - triangular arbitrage at FX market;
For the first time, I posted FPI in 2005 on Rob Booker's website.
Secondly, I think that virtually anything that anyone comes up with has already been done by someone else before.
Last but not least, Triangular arbitrage is only one of the applications
of FPI as FPI is more universal. In any case, I'm not paid by my clients for a system being original, but for a system being profitable
2. you are right that with 3 currency pair you can create fully hedged portfolio, but you should properly calculate amount of third currency pair to make portfolio hedged, and thats why Oanda is ideal for such puproses as it allows to trade any amount of curency
That's right and it has been discussed extensively in this thread before. I'm using EFX where it's possible to size the position down to one currency unit, too.
3. it will not work on that brokers which allows to trade only full lots or minilots because you will have exposure and portfolo will not be hedged
That's sure and it has been discussed here before, too.
4. instead of monitoring Eur/usd*usd/chf*eur/chf=1 try to monitore short(eur/usd*usd/chf) - long(eur/chf)=x or wise versa and so on, it will give better signals for entries and exits
There are many ways on what exactly to monitor with an FPI scanner. There are actually a couple of billion combinations.
5. it will not work on 15 minutes charts only on tick data
6. this type of acitivity is being prohibited by all brokers, even Oanda
I agree, but there are ways on how to work around this.
7. if you want to trade this idea it will be better to trade it through several brokers for masking of this activity and increasing of numbers of such opportunities (Oanda will be best for doing hedge positions in third currency)
That's one of the options available.
8. the more you will hold you arb portfolio the more it will lose arb profit due to negative interest on all 3 currencies.
Unless you know how to take care of the interest rate issue with FPI ring.
10. This idea will not work for retail traders, but hedge funds explore it very much due to presence of good infrastructure and fast execution.
I'd rather say it won't work with "retail brokers".
Try to link this idea to 3 brokers with one of them being Oanda.
There exist better combinations.