Arbitrage Checker

Visualize the trend of the value obtained by dividing the price of specified Symbol A by the price of specified Symbol B on a graph. This allows you to easily grasp fluctuations in the relative strength and weakness of the two Symbols and identify any correlations. Additionally, statistical information such as maximum, minimum, average, median, and standard deviation is displayed, enabling detailed analysis of price fluctuations and trends.

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Overlay Prices

Note: If you select an Symbol with a small price as Symbol A and an instrument with a large price as Symbol B, the values may become too small, causing the graph to display incorrectly. In such cases, switching the Symbols will resolve the issue and allow the graph to display properly.

Tutorial / How to Use

How to Read & Use This Tool

The Arbitrage Checker visualizes the trend of the price ratio (Symbol A ÷ Symbol B) between two symbols on a chart. From basic concepts to chart reading and usage workflow, we guide even beginners through everything they need to know.

14 Key Terms to Know First

Just understanding these 4 terms before using this tool will dramatically speed up your learning.

① Arbitrage

A general term for trading techniques aimed at profiting from price differences between different markets or symbols. This tool is used to analyze the relationship between symbols.

② Price Ratio

The value calculated as Symbol A's price ÷ Symbol B's price. It expresses the relative strength of two symbols in a single number. Example: if EURUSD ÷ USDJPY rises, EURUSD is becoming relatively stronger than USDJPY.

③ Pair Trading

A trading method where, when the ratio of two highly correlated symbols deviates significantly from the long-term average, you sell the stronger side and buy the weaker side—profiting from the "ratio deviation" rather than the individual price movements.

④ Mean Reversion

The statistical tendency for prices or ratios to return to their long-term average. When ratios trade within a range, the assumption that extreme values revert to the mean tends to hold true.

2What Can This Tool Do?

Visualize 2-Symbol Comparison

Chart the ratio A÷B as a time series. Easily understand "which side is dominant" and "when the dominance shifted."

Discover Pair Trading Opportunities

Spot the moment a ratio significantly deviates from its average, or breaks out of a long-term range. Useful for planning mean-reversion pair trading strategies.

Portfolio & Correlation Analysis

Compare combinations of currency pairs, indices, commodities, and cryptocurrencies. Useful for evaluating portfolio diversification and planning hedging strategies.

3Reading the Price Ratio Chart

The vertical axis shows the "Symbol A ÷ Symbol B" ratio; the horizontal axis is time. Focus not on the absolute ratio value, but on the "direction of movement" and the "degree of deviation from the average."

Ratio Rising → Symbol A DominantSymbol A is becoming relatively stronger than Symbol B. A is rising more / falling less than B.

Ratio Falling → Symbol B DominantSymbol B is becoming relatively stronger than Symbol A. B is rising more / falling less than A.

Ratio Flat → Range MarketBoth symbols moving at the same pace. Extreme deviations create mean-reversion pair trading opportunities.

Sudden Change → Major EventA sudden ratio change may indicate a major news or economic indicator for one symbol. Identifying the cause is critical.

⚠️ Focus on the "Change," Not the Absolute ValueThe absolute value of a ratio like EURUSD ÷ USDJPY (e.g., 0.0073) has no special meaning. What matters is "whether it's rising or falling," "how far it has deviated from the long-term average," and "when major changes occurred."

44 Key Patterns to Remember

Price ratio charts typically show one of four patterns. Understanding each pattern's characteristics and analysis methods is essential.

PATTERN A

Pattern A — Persistent Uptrend

How to Spot: The ratio trends consistently upward. Short-term corrections occur, but the upward trend continues.

What It Means: Symbol A is structurally dominant over Symbol B. Often driven by fundamentals such as economic factors, interest rate differentials, and supply/demand.

Analysis: Consider going long A solo / short B solo, or hedging against B.

PATTERN B

Pattern B — Persistent Downtrend

How to Spot: The ratio trends consistently downward. Short-term rebounds occur, but the downward trend continues.

What It Means: Symbol B is structurally dominant over Symbol A. Negative factors for A and positive factors for B persist.

Analysis: Consider going long B solo / short A solo, or hedging against A.

PATTERN C

Pattern C — Stable Range (Mean Reversion)

How to Spot: The ratio oscillates between fixed upper and lower bounds over an extended period. No clear directional trend.

What It Means: The relative relationship between the 2 symbols is stable. The best pattern for pair trading—target mean reversion from extreme values.

Analysis: Sell the stronger side at the upper bound and buy the weaker side at the lower bound—"mean-reversion pair trading."

PATTERN D

Pattern D — Breakout (Structural Change)

How to Spot: The ratio breaks out of a long-term range and quickly trends in a new direction.

What It Means: A structural change in the relationship between the 2 symbols may have occurred—often due to monetary policy shifts, geopolitical events, or industry structure changes.

Analysis: Simple mean-reversion strategies are risky. Identify the cause and consider following the new trend.

💡 Golden Rule for Symbol Pair SelectionChoose pairs that are economically or statistically correlated. Examples: currencies from the same region (EUR-based, commodity currencies), commodities of the same category (gold and platinum, oil and natural gas), or indices from the same region (Nikkei and TOPIX, S&P 500 and Nasdaq 100). Comparing unrelated symbols won't reveal meaningful patterns.

55-Step Usage Workflow

This tool is not a "trading method" to execute, but an analytical support tool to understand relationships between symbols. Use it in the following flow.

Select 2 Symbols to AnalyzePick economically or statistically related symbol pairs (same-region currencies, same-category commodities, same-region indices). Comparing unrelated symbols yields no meaningful patterns.

Check the Current State on the Price Ratio ChartCheck the ratio's movement on both long-term and short-term timeframes. Identify which pattern (A–D) applies and how far the current ratio is from the long-term average.

Confirm Fundamental FactorsCheck the economic factors behind the ratio's movement (interest rate differentials, policy, supply/demand, geopolitics). Judge whether the move on the chart is "structural" or "temporary."

Detailed Analysis of Individual SymbolsAnalyze each symbol in detail with MT4/MT5 or other Research Hub tools (Trend Analysis, RSI Analysis, etc.). Set entry / stop loss / take profit.

Execute StrategyBased on the analysis results, execute regular trades on each symbol.

6Do's and Don'ts

✔ Choose Highly Correlated Symbol PairsComparing unrelated symbols reveals only noise. Choose economically related pairs: same-region currencies, same-category commodities, or same-region indices.

✔ Check Both Long-Term and Short-TermOnly short-term views can be misled by temporary fluctuations; only long-term views miss current opportunities. Checking both timeframes is essential.

✔ Verify Fundamentals AlongsideUnderstanding the economic factors behind ratio movements (rate differentials, policies, supply/demand) helps distinguish "temporary noise" from "structural change."

✔ Combine with Other Research Hub ToolsCombining with Trend Analysis, RSI Analysis, Volatility Heatmap, etc. enables more comprehensive and accurate analysis.

✘ Don't Judge by the Ratio AloneThe ratio only shows "relative movement," not each symbol's absolute movement or risk. Always confirm individual symbol charts and news.

✘ Don't Chase Sudden MovementsSudden movements during breakouts are hard to classify as structural change or temporary overreaction. Identify the cause calmly before deciding.

✘ Don't Ignore News EventsEmployment data, policy announcements, geopolitical events temporarily move ratios significantly. Note that pattern recognition reliability drops around announcements.

✘ Don't Skip Risk ManagementEven with thorough analysis, markets can move unexpectedly. Always set stop losses and limit risk per trade to 1–2% of your account.

7Frequently Asked Questions (FAQ)

How is pair trading different from arbitrage?

"Arbitrage" exploits price discrepancies of the same instrument instantaneously and risk-free. "Pair trading," by contrast, is a statistical approach where you target mean reversion when the ratio of two highly correlated symbols deviates from its average—selling the stronger and buying the weaker. Pair trading involves risk and is a normal investment strategy.

What symbol pairs do you recommend selecting?

The key is to choose economically correlated pairs. Examples: EUR/USD and GBP/USD (both vs. USD), USD/JPY and USD/CHF (both USD-based). For commodities: gold and platinum, oil and natural gas. For indices: Nikkei 225 and TOPIX, S&P 500 and Nasdaq 100. Symbols from the same economic region or category are best suited for analysis.

What does the absolute value of the price ratio (e.g., 0.0073) mean?

The absolute value itself has no special meaning. What matters is "whether it's rising or falling compared to the past," "how far it has deviated from the long-term average," and "when major changes occurred." On the chart, focus on the waveform (uptrend / downtrend / range / breakout) rather than the vertical axis values.

Can I make trading decisions with this tool alone?

No. This tool only shows the "relative relationship between 2 symbols" and does not include individual symbol movements, risks, volatility, or fundamentals. Combine individual chart analysis, economic indicators, news, and risk management (e.g., 1–2% of account per trade) for actual trading decisions.

Can I use this for hedging strategies?

Yes, very effectively. For example, "when holding a long USDJPY position, combining it with a short EURUSD reduces USD-related risk." Use the price ratio chart to verify the relationship between the two symbols and assess whether hedging will be effective.

How is correlation different from co-integration?

Correlation measures how similarly two symbols' price movements correlate (−1 to +1). Co-integration is a statistical property where the long-term relationship between two symbols' price difference or ratio is stable. Pair trading strategies are theoretically based on co-integration, not just correlation.

8Glossary (Mini-Dictionary for FX Beginners)

Arbitrage: A trading technique aiming for risk-free profit by exploiting price differences between different markets, symbols, or brokers.
Pair Trading: A statistical trading method where the price ratio of two highly correlated symbols deviates from the average—sell the stronger, buy the weaker. A standard strategy with risk.
Price Ratio: The value of Symbol A's price ÷ Symbol B's price. Expresses the relative strength of two symbols in a single number.
Mean Reversion: The statistical tendency for prices or ratios to return to their long-term average. Especially effective in range-bound markets.
Correlation Coefficient: An indicator from −1 to +1 expressing how two symbols' price movements move together. Closer to +1 means same direction; closer to −1 means opposite direction.
Co-integration: A statistical property where the long-term relationship between two symbols' price difference or ratio is stable. Theoretical basis of pair trading.
Spread Trading: A method that targets the price difference between two related symbols. Similar to pair trading—focusing on the "difference" rather than the price itself.
Triangular Arbitrage: A technique targeting differences between theoretical and actual rates of three currency pairs (e.g., EUR/USD, USD/JPY, EUR/JPY).
Hedge: Taking a position in the opposite direction in correlated symbols to reduce risk on an existing position. Use this tool to find hedge candidates.
Volatility: The size of price fluctuations. The larger the ratio chart's fluctuations, the more unstable the relationship between symbols.