Arbitrage trading strategy involves exploiting price differences between markets or exchanges to generate profits. Here's how it works¹ ²:
- *Identify Price Discrepancies*: Find assets with different prices on various exchanges.
- *Buy Low, Sell High*: Purchase the asset on the exchange with the lower price and simultaneously sell it on the exchange with the higher price.
- *Profit from Difference*: Pocket the price difference as profit.
*Types of Arbitrage Strategies:*
- *Cross-Exchange Arbitrage*: Exploiting price differences between two or more exchanges.
- *Triangular Arbitrage*: Profiting from price discrepancies within a single exchange.
- *Decentralized Exchange (DEX) Arbitrage*: Capitalizing on price differences between DEXs or between DEXs and centralized exchanges.
Arbitrage trading requires speed, automation, and market knowledge to execute trades quickly and efficiently.
