Many of the worlds leading financial analysts estimate that nearly $1.9 Trillion are traded daily on the world's largest market: FOREX.
An entire eco system exists to exploit the spread between one currency and another. This may be the most poignant example of Arbitrage of them all.
At the most basic fundamental level arbitrage does not necessitate the probability of a loss; it is more to do with the exercise of buying at a fixed price to sell on to an existing market buyer for a pre-established price that includes a built in profit margin.
However, this is not always the case.
Billions of dollars are put up for gamble on global currencies and stock markets - trading the simplistic system of buying low to sell high.
The top players within these markets deal in astronomical sums of money on a daily basis for clients. All that is needed is a minute change in value, say 0.3 percent, and the potential to earn a vast return is there. It's basically a game of volume. Traders in these markets are looking to exploit this on a daily basis.
There is a problem with arbitrage at this level; it is not the "how to" that makes it difficult to compete but more about the almost unfathomable amounts of capital required to take advantage of such small incremental changes in the market value.
Small Changes to Market Value Vastly Inflates Potential ROI
Think about it - 0.3% of 10 million dollars is still three hundred thousand; commission for a days work not be sniffed at. And this can then be put through a "rinse & repeat" process - the old adage remains true - money makes money.
But - Traffic Arbitrage functions on an entirely different level. It will involve more variables that require "personal" attention and does not benefit from infinite vertical scalability. Meaning at some point you can't just pump more money into the same "pick", and because of this you have to diversify.
Micro Trading on Forex
To the big players, this makes Traffic Arbitrage unattractive players since they would potentially need tens of thousands of sites and pages to flip their hundreds of millions on a daily basis.
But for the small time market investors this is very good news indeed, as you are left with plenty of room to make small fortunes.
Let's consider the smaller scale of anything between $5 and a $50,000 daily cash flow. Small numbers like a basic $5 per day can quickly inflate to significant sums of money when combined with spectacular ROI, as can be achieved with Traffic Arbitrage.
A realistic view is to double returns on initial investment - for every 5 dollars spent, 10 dollars can be returned. And based on an annual time line, the overall capital growth could far surpass what can be achieved on any stock market.
Assuming that one reinvests all profits from their operation and starts with a capital of only $5 per day for 30 days ($150), a good use of Traffic Arbitrage could allow this capital to double every month.
Simple maths dictates that at the end of month 2, capital would be $300, by the end of month 6; it would have grown to $4800. 4 months later the capital would be $76,800.
After a full year, starting with only $5 a day, the reinvested capital would reach a whopping $307,200.
In Conclusion
As you can see the profit potential is quite clearly attractive. However the biggest mistake is count the dollars before they are hatched, do not be fooled. The possibility to see returns on investment do exist but the path is fraught with the need for proper application and discipline as well as continual testing and improvement.
You will find plenty of information based websites and eBooks on Forex trading. So if you're considering trading on Forex, take time to read up on this profitable yet high risk market place. If you get it right, the potential to earn unfathomable return on investment is as real as it gets.
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