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

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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?

  • 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

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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