EUR/USD V EUR/AUD V AUD/USD is one example of a Currency Pair Triangulation. Eliminate EUR from EUR/USD and EUR/AUD then
remainder pairs becomes USD/AUD Vs AUD/USD.
Triangulation trading was most popular from the 1970’s free float to 2009 when traders paid a full price for each lot. The Triangulation advantage and purpose before 2009 was to earn the discrepancy in pips between 2 price locations such as London Vs New York.
They called this arbitrage trading but done through Triangulations. London V New York routinely quoted 2 separate prices for the Ask Vs Bid Side or Buy V Sell. Generally the difference was a few pips but the trade and profit was guaranteed. Currency pairs had to arrange as 3 in order to view possible arrangements to take advantage of an arbitrage trade.
An arbitrage trade could be called a Scalp trade.
Since 2009, based on NFP Rules to pay a spread rather than a flat rate for each lot, the terminology was lost yet the concepts to triangulations are as old as the Bible and will remain for 1000’s of years in the future.
Triangulation depends on the 3 pair arrangement and what pairs a traders wishes to view.
If the arrangement was EUR/AUD, EUR/USD and AUD/USD then eliminate EUR and one views AUD/USD V AUD/USD. This doesn’t work.
If AUD/USD Vs EUR/USD V EUR/AUD is viewed then eliminate EUR and remainder becomes AUD/USD Vs USD/AUD. This works.
How about EUR/USD V AUD/USD V EUR/AUD. Eliminate EUR and remainder becomes USD/AUD Vs AUD/USD. This works.
28 currency pairs as 2 currencies per day factors as 378 combinations.
28 currency pairs as Triangulation or groups of 3 factors to 84.
28 Currency Pairs factored to groups of 4 = 112
How triangulation is viewed today is overbought Vs Oversold to 3 currency pairs, Relationship to vital point breaks and possible mis alignments. A mis alignment must align.