A tool designed for identifying and calculating potential profits from currency exchange rate discrepancies among three different currencies. For example, this tool might compare the exchange rates of USD to EUR, EUR to GBP, and GBP to USD, identifying opportunities where converting currency A to B, then B to C, and finally C back to A yields a profit after accounting for transaction fees.
This type of analysis is crucial in foreign exchange markets for exploiting momentary inefficiencies. Historically, such calculations were performed manually, but dedicated software and online platforms have streamlined the process, enabling faster identification and exploitation of arbitrage opportunities. These tools benefit traders by automating complex calculations and providing real-time data, increasing market efficiency by rapidly correcting pricing anomalies.