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Arbitrage Strategies

Capture risk-free profits by exploiting price inefficiencies across markets

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What is Arbitrage?

Arbitrage is the simultaneous purchase and sale of the same asset in different markets to profit from price differences. It's often considered "risk-free" profit because you're locking in the spread immediately, though execution risk still exists.

How Arbitrage Works

🔍Find Inefficiency - Same asset trading at different prices across markets

⚡Execute Simultaneously - Buy low on one market, sell high on another

💰Lock in Profit - The price difference (minus fees) is your guaranteed profit

🌍

Market Efficiency

Arbitrage helps equalize prices across markets, improving efficiency

⏱️

Speed Critical

Opportunities disappear in seconds as markets adjust

📊

Small Margins

Profits often 0.1-1%, requires volume or leverage

💡 Classic Example: Bitcoin Arbitrage

• Binance: BTC trading at $50,000

• Coinbase: BTC trading at $50,250

• Action: Buy 1 BTC on Binance ($50,000), sell on Coinbase ($50,250)

• Gross profit: $250 (minus transfer fees and trading fees)

⚠️
Not Actually "Risk-Free"
Execution risk (price moves before you complete both sides), transfer time (crypto needs confirmations), exchange failure, liquidity issues, and fees can all eat into or eliminate profits. True arbitrage requires instant execution.

✓ Requirements

  • • Multiple exchange accounts with funds ready
  • • Fast execution system (manual too slow)
  • • Real-time price monitoring
  • • Understanding of all fees and limits

⚡ Why Opportunities Exist

  • • Different liquidity on each exchange
  • • Geographic restrictions and regulations
  • • Transfer time creates temporary gaps
  • • Sudden news affects exchanges differently