Triangle

A triangle is a closed shape with three sides and three angles. In geometry, a triangle is a polygon with three edges and three vertices. It is one of the basic shapes in geometry. A triangle with vertices A, B, and C is denoted .

In financial mathematics, a triangle is a financial instrument that is based on the prices of three different assets. The most common type of triangle is the equity triangle, which is based on the prices of three different stocks. Other types of triangles include the commodity triangle, which is based on the prices of three different commodities, and the currency triangle, which is based on the prices of three different currencies.

Triangles are used by traders to hedge their risk and to speculate on the future movements of the prices of the underlying assets. They can also be used to create synthetic positions that are not available in the cash market.

There are a number of different ways to trade triangles. One common strategy is to buy one asset and sell two others in a ratio that will create a zero-cost position. This strategy is known as a delta-neutral trade. Another common strategy is to buy one asset and sell two others in a ratio that will create a positive or negative gamma position. This strategy is known as a gamma scalping trade.

Triangles can be a complex and risky financial instrument. Traders should carefully understand the risks involved before trading them.