#ArbitrageTradingStrategy ⸻
🧩 What Is Arbitrage?
Arbitrage is the practice of profiting from inefficiencies in pricing between different exchanges, brokers, or instruments.
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🧠 Core Types of Arbitrage Strategies
1. Spatial (Cross-Exchange) Arbitrage
• Buy on Exchange A, Sell on Exchange B
• Example: BTC at $30,000 on Binance and $30,100 on Coinbase
2. Triangular Arbitrage
• Involves three currency pairs
• Exploit differences in exchange rates between them
• Example (Forex or Crypto):
Trade USD → EUR → GBP → USD
If the round-trip yields more USD than you started with, arbitrage exists.
3. Statistical Arbitrage
• Use quantitative models to exploit mean-reverting relationships
• Pairs trading is a common example (e.g., Coca-Cola vs. Pepsi)
4. Futures-Cash Arbitrage (Cash-and-Carry)
• Long spot asset, short the futures (or vice versa)
• Profit from the convergence of spot and futures prices at expiry
5. Decentralized Finance (DeFi) Arbitrage
• Exploit price differences across DEXs (Uniswap, SushiSwap, etc.)
• Often uses flash loans to eliminate upfront capital