#ArbitrageTradingStrategy

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🧩 What Is Arbitrage?

Arbitrage is the practice of profiting from inefficiencies in pricing between different exchanges, brokers, or instruments.

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🧠 Core Types of Arbitrage Strategies

1. Spatial (Cross-Exchange) Arbitrage

• Buy on Exchange A, Sell on Exchange B

• Example: BTC at $30,000 on Binance and $30,100 on Coinbase

2. Triangular Arbitrage

• Involves three currency pairs

• Exploit differences in exchange rates between them

• Example (Forex or Crypto):

Trade USD → EUR → GBP → USD

If the round-trip yields more USD than you started with, arbitrage exists.

3. Statistical Arbitrage

• Use quantitative models to exploit mean-reverting relationships

• Pairs trading is a common example (e.g., Coca-Cola vs. Pepsi)

4. Futures-Cash Arbitrage (Cash-and-Carry)

• Long spot asset, short the futures (or vice versa)

• Profit from the convergence of spot and futures prices at expiry

5. Decentralized Finance (DeFi) Arbitrage

• Exploit price differences across DEXs (Uniswap, SushiSwap, etc.)

• Often uses flash loans to eliminate upfront capital