Topic: Trade-Arbitrage EA
Lets consider how does it work on EURUSD. Imagine that we have two synthetic pairs EURUSDx and EURUSDy.
They have similar dynamics, so if we open two opposite positions on these pairs we will have a hedged position.
Open: BUY EURUSDx and SELL EURUSDy. After some time we close these positions: SELL EURUSDx and BUY EURUSDy.
Profit: Profit = (BIDx - ASKx) + (BIDy - ASKy) = (BIDx - ASKy) + (BIDy - ASKx)
In the experssion presented above we know the value of the first bracket (BUY EURUSDx and SELL EURUSDy).
The value of the second bracket is known after positions close (SELL EURUSDx and BUY EURUSDy)
There are several cases with positive Profit values. One of them is:
At open: BIDx > ASKy,
At close: BIDy > ASKx.