#ArbitrageTradingStrategy

🔁 ARBITRAGE TRADING STRATEGY (Low-Risk, High-Discipline)

🧠 Core Idea:

Arbitrage involves buying low in one market and simultaneously selling high in another — exploiting price discrepancies for risk-free or low-risk profit.

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⚙️ 1. Types of Arbitrage Strategies

1. Spatial Arbitrage (Cross-Exchange Arbitrage)

Buy an asset on Exchange A (where price is lower)

Sell the same asset on Exchange B (where price is higher)

Common in crypto, forex, or commodities

2. Triangular Arbitrage (Forex/Crypto)

Exploit inefficiencies in currency conversion:

e.g., USD → EUR → GBP → USD

If the end result > starting value, profit is locked in

3. Statistical Arbitrage (Quant-Based)

Uses mean-reversion and historical price relationships

Trades pairs or baskets that deviate from statistical norms

Example: Long Coca-Cola / Short Pepsi if spread widens

4. Merger Arbitrage (Event-Driven)

Buy shares of a company being acquired

Short the acquirer’s stock (or hedge the position)

Profit from the convergence when the deal closes

5. Funding Rate Arbitrage (Crypto)

Long spot + short perpetual futures if funding is positive

Collect the funding fee with minimal directional exposure

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📈 Example: Crypto Arbitrage (Binance vs Coinbase)

BTC/USDT on Binance = $65,000 BTC/USDT on Coinbase = $65,300

Buy 1 BTC on Binance Sell 1 BTC on Coinbase

Spread = $300 (before fees) Net Profit = Spread - Fees

Requirements:

Capital on both exchanges

Fast execution and/or bots

Account for withdrawal times, fees, and slippage