#ArbitrageTradingStrategy Arbitrage trading is a low-risk, high-frequency strategy that exploits price differences for the same asset across different markets or platforms. In crypto, arbitrage is especially common due to the fragmented nature of exchanges.

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💹 What Is Arbitrage in Crypto?

Arbitrage = Buy low on one exchange → Sell high on another → Pocket the spread

Example:

BTC is $118,000 on Binance

BTC is $118,250 on Coinbase

Buy on Binance, transfer/sell on Coinbase = $250 profit (minus fees)

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🧠 Types of Arbitrage Strategies

1. Spatial (Exchange) Arbitrage

How it works: Buy on one exchange, sell on another.

Tools needed: Fast execution bots, accounts on multiple exchanges, capital split across venues.

Risk: Transfer delays can cause slippage.

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2. Triangular Arbitrage

How it works: Exploiting price inefficiencies between 3 pairs on the same exchange.

Example: BTC → ETH → USDT → BTC

If the prices don’t line up perfectly, you can profit.

Advantage: No need to move funds between exchanges.

Tools: Calculators, bots.

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3. Statistical Arbitrage

How it works: Uses models (mean reversion, correlation) to trade two or more assets that historically move together (e.g., BTC and ETH).

When to use: If price diverges too far, you bet on convergence.

Example: Long BTC, Short ETH when ETH/BTC ratio is stretched.

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4. Latency Arbitrage

How it works: Exploiting delay in price updates across exchanges using ultra-fast execution.

Requirements: Very low-latency bots (often colocated), fast feeds.

Mostly institutional or advanced quants.

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5. DeFi Arbitrage

How it works: Exploit price inefficiencies across decentralized platforms (e.g., Uniswap vs. Curve).

Tools: Flash loans, MEV bots, gas fee optimization.

Example: ETH is priced differently between SushiSwap and Uniswap.