#ArbitrageTradingStrategy

Arbitrage trading is a strategy that exploits price differences for the same asset across different markets to make risk-free (or very low-risk) profits.

🔁 How Arbitrage Works (Simple Example)

Let’s say:

Bitcoin is trading at $29,500 on Exchange A

And $29,700 on Exchange B

A trader could:

Buy 1 BTC on Exchange A for $29,500

Sell the same 1 BTC on Exchange B for $29,700

Profit = $200 (minus fees)

🧠 Key Arbitrage Trading Types

Type Description Example

Spatial Arbitrage Buy/sell the asset across different exchanges or markets. BTC price difference between Binance and Coinbase.

Triangular Arbitrage Exploits pricing inefficiencies between three currency pairs. USD → EUR → GBP → USD

Statistical Arbitrage Uses quantitative models to find pricing inefficiencies over time. Mean reversion strategies using pairs trading.

DeFi/Crypto Arbitrage Uses decentralized and centralized exchanges to exploit price differences. ETH/DAI price variation between Uniswap and Binance.

Latency Arbitrage Takes advantage of delay (lag) in price updates between exchanges. HFT (High-Frequency Trading) edge.

⚙️ Tools & Requirements

Fast Execution – Especially for crypto or FX arbitrage.

Low Fees – Profit can vanish with high transaction costs.

Multi-Exchange Access – Accounts on multiple platforms.

Bots/Algorithms – Many arbitrage strategies are automated.

Real-Time Price Feeds – Price differences disappear in seconds.