"What is Arbitrage Trading?"
Arbitrage trading is a strategy that takes advantage of price differences for the same asset across different exchanges. Let’s say Bitcoin is priced at $40,000 on Exchange A and $40,300 on Exchange B. A trader can buy it on A and sell it on B, making a quick $300 profit (minus fees). This method is simple in theory but needs speed, precision, and low transaction costs. Many professionals even use bots to catch these small windows of opportunity. Arbitrage is considered low-risk compared to other trading styles, but it still has challenges—network delays, fees, and price slippage. It works best in less efficient markets where price gaps appear often. If you're starting out, try tracking a few exchanges and studying price differences. It's a smart way to understand market dynamics while learning how to profit from timing. Think of it as being a digital middleman—buy low, sell high instantly.
