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Exchanging Currencies to Make Fast Cash Without Contracts

With all the different currencies available for purchase around the world, here is a quick guide to make a substantial amount of money for exchanging them correctly.

Difference and history between different exchange rate systems:

Fixed (or Pegged) Exchange Rate System

How to Make a Lot of Money Extremely Fast via @nyrdubs

Exchanging currencies prior to 1971 was difficult to make money since the value of a country’s currency was fixed on the amount of gold each specific country had in reserves.  This system of monetary value was known as “The Fixed Exchange Rate System”. This system had the benefits of controlling inflation and made it easier as well as much more predictable to trade between two countries since it was much easier to peg the value of each country’s GDP, or Gross Domestic Product.

Floating Exchange Rate System

In 1971 the United States decided to switch to the concept of the “Floating Exchange Rate System”. The idea behind this system is that monetary value is based on fluctuations in the foreign exchange market. This means that there are several global economics factors that may make one currency appreciate or depreciate against another. This in turn leaves individuals and corporations with the decision of whether to export or import goods depending on how much cheaper it may in the long or short term based on the current economic factors affecting the foreign exchange market around world.

Most countries around the world currently now use floating exchange rate systems. These are subject to intervention from governments as they are able to buy and sell mass quantities to increase or decrease the supply and demand of a particular currency thus affecting the overall value of that particular currency. The downside of the floating exchange rate system is that it can involve several negative factors such as inflation and financial fragility since a country may print as much money as they desire  to meet obligations pertaining to intergovernmental programs(which in my belief has a great part in what caused our current financial crisis).

Arbitrage:

This tactic is currently not as easily utilized as it was in the past as technology is able to catch these kind of flaws. The main idea of arbitrage is to buy one currency at one bank at a low spot rate then immediately sell it somewhere else at higher spot rate to make a profit equal to the differential of the two spot rates. Although this is uncommon, if you come across the opportunity to do this I suggest you immediately take advantage of it!

Triangular Arbitrage:

This is easily the most effective type of arbitrage but takes a bit more research and is a lot more confusing to implement. The basic strategy behind triangular arbitrage involves three knowledgeable trades:

  1. Exchanging an initial currency for a second
  2. Exchanging the second currency for a third
  3. The exchanging the third currency for the initial currency.

A well-defined example of how this works and the benefits:

Triangular Arbitrage Example

  • Bank A sells $5,000,000 to Bank B for euros, receiving €4,085,500. ($5,000,000 × 0.8171 €/$ = €4,085,500)
  • Bank A sells €4,085,500 to Bank B for pounds, receiving £3,430,311. (€4,085,500 ÷ 1.1910 €/£ = £3,430,311)
  • Bank A sells £3,430,311 to Bank C for dollars, receiving $5,025,406. (£3,430,311 × 1.4650 $/£ = $5,025,406)
  • Bank A ultimately earns an arbitrage profit of $25,406 on the $5,000,000 of capital it used to execute the strategy.

This is clearly a strategy for large sums of money but even with some low end exchanges of cash you can make at least a couple hundred dollars of disposable income, but who knows, its possible that one day anyone can be raking in the big bucks.

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About nyrdubs
Living life, Loving life

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