FPI ? a simple mathematical draft
Let?s make things simpler and let?s picture the Forex quotes as the plain mathematical fractions. Let?s have three Forex symbols, represented by commonplace fractions:
a / b = 2.5
b / c = 2
c / a = 0.2
Are we able to derive the values of a, b and c variables from these three expressions? No way. As stated above, the value can?t be expressed without a comparison to some other value. But we know what is the relation between the values though.
In this example, there are three fractions (FX symbols):
a / b
b / c
c / a
and three separate variables (currencies):
a
b
c
The quotes (the values of these fractions) in this example are not random. Actually, even though we don?t know the values of a, b and c, there is a mutual relationship between the above fractions. We can even derive the third fraction?s value from the first two:
a / b = 2.5
b / c = 2
c / a = ?
c / a = 1 / ((a / b) * (b / c))
c / a = 1 / (2.5 * 2)
c / a = 1 / 5
c / a = 0.2
Adakah yang ini?