Donald Lucas D McDonald#7

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What is quantitative arbitrage in forex trading?

Quantitative arbitrage applies statistical and mathematical models to exploit inefficiencies across multiple pairs or instruments. It may combine machine learning, factor models, and big data to predict short-term mispricings. For example, a model may detect that AUD/USD is lagging behind moves in iron ore futures and position accordingly. Benefits: scalability, systematic consistency, and edge through computation. Risks: model overfitting, unexpected correlations, and regime shifts that invalidate signals. Institutions invest heavily in infrastructure for quant arb; retail traders can adapt by learning basic regression models and using tools like Python for analysis. Quantitative arbitrage emphasizes that forex profitability increasingly depends on data-driven rigor rather than intuition.