💹 Arbitrage: Profit from Price Differences
Learn how traders exploit inefficiencies across exchanges
Your Progress
0 / 5 completed⚖️ Crypto Arbitrage: Profit from Price Differences
Arbitrage is the practice of buying an asset on one market and simultaneously selling it on another to profit from price differences. In crypto, these opportunities arise constantly due to market inefficiencies.
🎮 Interactive: Arbitrage Types Explorer
Explore different arbitrage strategies used in crypto markets:
Simple Arbitrage
Buy low on one exchange, sell high on another - the classic arbitrage strategy
📋 Requirements
- • Accounts on multiple exchanges
- • Fast execution
- • Capital for transfers
⚠️ Risks
- • Transfer delays
- • Withdrawal fees
- • Price movement during transfer
Why Arbitrage Exists
Market Fragmentation
Crypto trades on hundreds of exchanges globally. Each exchange has its own order book, liquidity, and price discovery mechanism, creating frequent price discrepancies.
Information Lag
News and market events don't reach all exchanges simultaneously. Some markets react faster than others, creating temporary arbitrage windows.
Liquidity Differences
Major exchanges like Binance have deep liquidity, while smaller exchanges may have thin order books, leading to larger price variations.
Execution Speed
Not all traders have the same execution speed. Those with faster infrastructure, bots, or MEV access can exploit opportunities before others.
The Arbitrageur's Role
Arbitrageurs are market efficiency providers. By exploiting price differences, they:
- ✓Equalize prices across markets by buying low and selling high
- ✓Add liquidity to both exchanges, making markets more robust
- ✓Reduce spreads by increasing trading activity
- ✓Stabilize prices by correcting inefficiencies quickly
However, arbitrage is becoming increasingly competitive. Professional traders use sophisticated bots, co-located servers, and MEV strategies to capture opportunities in milliseconds.
What You'll Learn
This module will teach you:
- •Cross-exchange arbitrage: How to profit from price differences between CEXs and DEXs
- •Triangular arbitrage: Exploiting inefficiencies in trading pairs on the same exchange
- •Flash loan arbitrage: Using uncollateralized loans to execute large trades with minimal capital
- •MEV strategies: Understanding miner extractable value and sandwich attacks
- •Risk management: How to calculate profits, account for fees, and manage execution risks