#ArbitrageTradingStrategy
How does arbitration work? 🤔
Buy cheap in one place and sell expensive in another 💸: The goal is to obtain a nearly immediate profit with no apparent risk, as long as it is executed correctly 📈.
Temporal inefficiency of the markets ⏱️: Arbitration is based on the fact that markets are not always synchronized, which creates opportunities to make money 💰.
Types of Arbitration 📝
Spatial Arbitration 🌐: Price differences between different exchanges 📊.
Triangular Arbitration 🤝: Exchange between three different currency pairs to obtain a profit without exposure to market risk 💰.
Statistical Arbitration 📊: Use of mathematical models and algorithms to detect small price inefficiencies 🔍.
Futures Arbitration 📈: Difference between the price of an asset in the spot market and its corresponding futures contract 📊.
Risks of Arbitration ⚠️
Execution delays (latency) ⏱️: It can affect profitability 🤔.
High commissions 💸: Reducing or eliminating profit 📊.
Sudden price changes 🚨: Affecting the strategy 📊.
Liquidity limitations 🌀: In some of the markets, which can limit opportunities 🤔.
Who uses arbitration? 👥
Professional traders 👨💼
Hedge funds 📈
High-frequency algorithms 🤖
Retail traders exploring opportunities in the cryptocurrency market 💻
