What Is Arbitrage?
Arbitrage is all about profiting from price differences for the same asset across different markets. The trick? You buy and sell almost simultaneously to lock in a risk-free profit before the gap closes. It’s like being in two places at once, and thanks to today’s high-speed trading tech, you practically can be. Think of it as a financial superpower: spotting inefficiencies and cashing in while the market’s still blinking.
Strategy 1: Spatial Arbitrage (The Classic Move)
This is the simplest form of arbitrage. You find an asset priced differently on two exchanges, buy on the cheap one, and sell on the pricey one. Boom—profit!
Strategy 2: Triangular Arbitrage (The Currency Hustle)
Ready to level up? Triangular arbitrage involves three currencies and a little financial wizardry. If the exchange rates between them aren’t perfectly aligned, you can convert through all three and end up with more than you started. It’s like a magic trick with money!