#ArbitrageTradingStrategy ## Arbitrage Trading Strategy

Arbitrage trading is a strategy that takes advantage of price differences for the same asset across different markets or instruments. Traders buy low in one market and sell high in another, profiting from the price discrepancy with minimal risk ¹.

### How Arbitrage Trading Works

- Identify an asset trading at different prices on two or more exchanges.

- Quickly buy the asset where it's cheaper.

- Simultaneously sell it where the price is higher.

- Pocket the difference as profit after transaction costs.

### Common Types of Arbitrage Strategies

- *Spatial Arbitrage (Market Arbitrage)*: Exploiting price differences of the same asset on different exchanges.

- *Statistical Arbitrage*: Uses quantitative models to find temporary price inefficiencies between correlated assets.

- *Triangular Arbitrage*: Involves converting one currency to another, then to a third, and back to the original to profit from discrepancies in exchange rates.

- *Merger Arbitrage*: Trading stocks of companies involved in mergers or acquisitions, betting on the deal closing and price convergence ¹ ².

### Key Considerations & Risks

- *Transaction costs*: Fees and commissions can erode profits.

- *Execution speed*: Arbitrage requires fast trades before prices converge.

- *Market risk*: Sudden price moves or delays can lead to losses.

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