Arbitrage trading is a strategy that takes advantage of price differences for the same cryptocurrency across multiple exchanges or markets. Traders buy crypto at a lower price on one platform and sell it at a higher price on another, profiting from these temporary inefficiencies. Common types include cross-exchange arbitrage, triangular arbitrage involving multiple trading pairs, and peer-to-peer (P2P) arbitrage on decentralized marketplaces. Many traders use automated bots to monitor prices and execute trades quickly, as speed is crucial to capitalize on fleeting opportunities. This strategy is favored for its relatively low risk compared to directional trading and its potential for consistent profits, especially in volatile crypto markets. Effective arbitrage requires constant monitoring, fast execution, and efficient risk management.

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