I'm just beggining to research the forex market and how I can use it to help hedge commodity positions. But I have a question regarding multi-leg positions. For example: If I sell the EUR/USD spread and at the same time sell the USD/CHF spread how can I quantify the difference between that and selling the EUR/CHF spread. It seems to me that the only practical difference is the dirrectness of the relationship. I'd appreciate any insight into this that could be offered. Thank you.
There really is no difference. It's effectively the same thing. Except, you end up paying the spread 3 times instead of 1.
First, with the opening example you pay the spread twice, not trice, but the point is the same. Second, you don't "sell the EUR/USD spread", the broker sells you the spread, you can only pay the spread. You sell the pair. But this is semantics, and doesn't change the point. Newbies seem to always end up with this idea of triangular arbitrage, I guess its because its pretty easy to confuse noobs, and perhaps to slip them something. Seriously, forget about 'arbitrage', and learn how to trade. Find out about price action, build your system on it, and start small. Build it up over the years. That's it. There's no 'free lunch', or 'easy way to do it'. Arbitrage is the playfield of real players (banks, MMs, MNCs, CBs, etc.), you simply can't make a living of it.