Arbitrage trading means:
Taking advantage of the price difference of the same coin on different exchanges. This is what arbitrage trading is.
See a simple example ๐
Coin A is available for $100 on Exchange 1
The same coin is available for $102 on Exchange 2
๐ Buying at $100 and selling at $102 = this is Arbitrage
In this:
You don't have to guess the market direction (up or down). Only the price difference is used in this arbitrage trading.
๐ How does Arbitrage work in Crypto?
The crypto market runs 24/7, even on Sundays.
And on every exchange:
Liquidity is different.
Demand and supply are also different.
Because of this, the price of the same coin is slightly different.
Common types of Arbitrage: see below ๐
1๏ธโฃ "Exchange-to-Exchange" arbitrage trade
2๏ธโฃ "Spot vs Futures" arbitrage trade
3๏ธโฃ "Funding rate" based arbitrage trade
(If you are a beginner, start with exchange-to-exchange arbitrage)
โ ๏ธ Where do people make mistakes in Arbitrage?
Many people think:
โThere is no risk, guaranteed profit is obtainedโ but the truth is completely different.
โ This is the biggest mistake. The problems can be:
Transfer takes time
1) Fees eat up the profit
2) The price gap closes
3) Withdrawal/deposit delays
๐ Profit looks good on paper, but not in reality.
๐ก๏ธ How to Handle Risk in Arbitrage?
โ
1. Calculate fees first
Trading fees
Withdrawal fees
Network fees
If there is no profit left after fees โ don't take the trade. The possibility of loss increases. โ
2. Use a fast network
Slow blockchain = risk
Fast transfer = less risk
โ
3. Start with a small amount
Never try arbitrage with your full capital.
First, understand the process thoroughly, then gradually increase the amount.
โ
4. Stay away from the word "guaranteed" profit because nothing is 100% guaranteed in crypto.
Stay away from anyone who says that.
๐ง Important Reality Check
Arbitrage:
Sounds easy
But execution is difficult
1) Big players:
2) Bots
3) Fast systems
4) High capital
They use these things, and that's why they make a profit. They create strategies and only trade when the trade aligns with their plan; otherwise, they don't trade. They keep observing.
For retail traders:
๐ It's a low-risk, low-return strategy
๐ It only works when there is discipline
๐ Final Learning
Arbitrage trading:
It's not a shortcut and it's not risk-free
It requires skill + calculation
Therefore:
โ๏ธ Do it after learning
โ๏ธ Follow logic, not hype
โ๏ธ Focus on capital protection
Don't just follow others; ask yourself how you can manage profit and loss.
๐ Thank you for reading. If you found this helpful, please like it. If you need information on any topic, please write in the comments.๐
"Read and become better" ๐ง
$BNB #Arbitrage #tradingtechnique #ArbitrageMasters