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Assume there is following information on the pricing of the currency pair

enter image description here

Based on the image above, the spread for AUDUSD is lower than USDAUD (0.9 vs 1.6). Assuming I wanted to buy USDAUD, does it make more sense to place a sell order on AUDUSD instead? What's the pros and cons in doing so?

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  • Pro: You will lose money. Con: You won't. Forex speculation makes no sense unless you hate money.
    – Pete B.
    Mar 3 at 13:25
  • @PeteB. I don't quite understand your comment. Can help to elaborate more ?
    – rcs
    Mar 3 at 13:40
  • Forex is a losing game. Is that clear enough?
    – Pete B.
    Mar 3 at 13:48
  • @rcs - To be clear you're sort of reading it wrong. You'd have to convert those to a percentage in each case (and then they are the same). In other words for a given amount of currency X (the same in both cases) do the calculation, and they're identical (or only a tiny rounding difference).
    – Fattie
    Mar 4 at 12:21
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It's an illusion. Selling AUDUSD is the same as buying 1/USDAUD, and 1/0.78328 (the ask for USDAUD) is 1.26683 (the bid for AUDUSD). Same for the other pair - 1/0.78337 is 1.276536. So in that pair there is a difference of about .00003 (with some rounding error possible). THe magnitude of the spread is irrelevant.

Otherwise, you could buy one pair, sell the reciprocal, and have a risk-free profit, so arbitrageurs will trade these discrepancies until the arb difference goes away.

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