Protect The Pain Trade: Triangular Currency Arbitrage

Step 1: Select the Pivot Currency

The pivot currency is the base currency you want to hedge or trade against. This currency will be the core around which your arbitrage strategy revolves.

Step 2: Use Mataf.net for Correlation Data

Open Mataf.net and navigate to the correlation matrix. Select [2] negatively correlated assets that complement your pivot currency. These negatively correlated pairs will serve as your hedges (Hedge A and Hedge B). These assets should be chosen based on how they move in opposition to your primary pair, ensuring that the overall risk is minimized through diversification.

Step 3: Create a Composite Chart

Combine the primary currency and hedging pairs using the following formula in your charting platform:
{Primary Pair} / (Hedge A + Hedge B)
Press enter to create a composite chart. This chart will show you an aggregated view of how your triangulated positions are performing.

Use this chart to analyze the best entry and exit points, optimizing your gains while protecting yourself from unnecessary losses or market volatility.

For more detailed insight or guidance on entries and exits, feel free to message me privately on TradingView or contact me to gain access to more strategies like this one through my daily flow trades.

Looking forward to seeing you in the community!