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what is a typical way forex brokerages can provide cheap leverage for their customers?
The high leverage is only for small accounts (under 1 mil), and interest IS charged (and paid). And a lot of positions offset each-other, so the net amount is much smaller.
Is statistical arbitrage on FX possible?
I think it's hard to find a simple pairs trading strategy for currencies because there are few of them if you exclude the wild exotics and no two countries are as similar as Coca-Cola and Pepsi to give the classical example.
Does HFT make sense in a pro-rata market?
Yes, order canceling when your algo feels that it's a bad place to be in the book (it's about to get hit)