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Forex Arbitrage - How One Can Use An Arbitrage Strategy To Profit In Forex Trading

What is arbitrage and how do you know whether it's the right strategy for you to adopt in Forex trading?
As defined by Wikipedia, Arbitrage means: the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset. When applying this definition to Forex trading, one can adopt one of two methods in order to make money.
One way involves the use of three currencies. For example, trading USD to Euros to Canadian Dollars. The idea behind this is that though you may not have made money on the exchange going from USD to Euros but you will have made some money going from Euros to Canadian Dollars. It's a way of not using USD to buy Canadian Dollars (for example) to avoid losing money in the trade. So while you have traded now twice, you've used a second currency to leverage a profit because the initial trade wouldn't have netted a profit for you.
Another form of Arbitrage is leveraging the difference in exchange rates of one brokerage or bank account against another. For example, though I can go online and see that the exchange rate between the USD and the Euro is $1.00 to €1.44, but one brokerage house may have the exchange rate being $1.00 to €1.4435 and another may have it at €1.4429. Seems as though they're just fractions of pennies but when one is purchasing thousands or hundreds of thousands of dollars in a particular currency, that difference can amount to a big difference. Well, I'd rather buy €1.4429 and sell it back at €1.4435. That's where your profit comes in. You're buying from one as you simultaneously sell to another.
Why would investors go through the trouble with forex arbitrage rather than just trade one currency for another? Here are some reasons:
* Currencies fluctuate in value daily
* Leveraging against these fluctuations can mean big gains
* It's a fast way to realize huge profits
* It's a very easy transaction, regardless which method you use employ
* If you adopt the brokerage house method, they're both happy because you've used the services of, and paid the fees of, two houses, rather just one. It's a win/win for all involved.
Now, that you understand the idea behind forex arbitrage, does this sound like something you want to give a try?