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Trading Glossary

Triangular Arbitrage

Triangular arbitrage is the process that ensures that all exchange rates are mutually consistent.The process of triangular arbitrage is exactly that of finding and exploiting profitable opportunities in such exchange rate inconsistencies.Triangular arbitrage (also referred to as cross currency arbitrage or three-point arbitrage) is the act of exploiting an arbitrage opportunity resulting from a pricing discrepancy among three different currencies in the foreign exchange market.