## Arbitrage Trading Strategy: Opportunities and Challenges in 2025
Arbitrage is known for exploiting temporary price differences of the same asset across different markets by buying low and selling high simultaneously. Although described as 'low risk', it requires precision and advanced technology in 2025:
### 🔑 Key Mechanisms:
1. Cryptocurrency Arbitrage:
- Buying from one exchange (like Binance) and selling on another (like Kraken) while considering transfer and gas fees.
- Exploiting price differences between decentralized exchange (DEX) platforms using instant loans.
2. Forex Arbitrage:
- Triangular arbitrage between 3 currencies (like EUR/USD → USD/JPY → EUR/JPY).
- Relying on servers with latency of less than 1 millisecond to overcome the competition.
3. Traditional Markets:
- Merger arbitrage (buying shares of a target company before the acquisition is completed).
- Statistical arbitrage between correlated assets (like gold and the dollar).
### ⚠️ Critical Challenges:
- Speed: Spreads narrow in fractions of a second, necessitating automated trading systems.
- Costs: Execution and spread fees can erode profits if they exceed 0.3%.
- Liquidity: Difficulty executing trades in low-trading assets.
> Summary: Arbitrage is rewarding for those who possess:
> - Advanced technology (bots, direct access to exchanges).
> - Sufficient capital to absorb risks.
> - Deep understanding of exchange policies and transaction costs.
> ⚠️ Avoid absolute profit promises – success depends on accuracy and efficiency!