An experienced investment professional and talented high school football coach, Nicholas "Nick" Giannatasio works as both principal and managing director of The Eastern Group, primarily working in emerging markets in Asia, the Americas, and Europe. In these roles, Nick Giannatasio focuses on real estate and currency arbitrage.
Arbitrage is a common investment strategy designed to take advantage of the inefficiencies in the market. The most common implementation of this strategy is in currency trading, where investors purchase and sell currency on foreign markets. Currencies are extremely liquid, and their value often fluctuates from day to day. In the past, there were enough inefficiencies and price discrepancies between different banks or markets that regular investors were able to take advantage of that, buying and selling currency through different exchanges or banks.
Today, arbitrage is not something the average investor can take advantage of. Due to the high flow of information, the value of the currency can change quickly and any discrepancies in price might only be present for a few seconds. It takes highly sophisticated computer software to trade quickly enough to make a profit.
Currency arbitrage is often described by investors as risk-free because buying and selling currency does not bet on the future performance of assets (like with stocks and bonds). However, there is always some amount of risk involved. In the case of currency arbitrage, that often involves transaction fees, issues with foreign taxes, and slippage (or the execution of a trade at a price different than what you expected, due to swiftly changing rates).
