🟪Arbitrage

• Arbitrage is a strategy used by cryptocurrency traders to take advantage of price differences between different exchanges or markets. The idea is to buy an asset on an exchange where the price is lower and then sell it on another exchange where the price is higher, profiting from the difference.

The benefits of arbitrage include the possibility of quick gains and relatively low risk, since the strategy is based on price differences and not on the direction of the market.

• A numerical example would be if the price of Bitcoin (BTC) was being traded for $50,000 on one exchange and for $51,000 on another.

• A trader could buy BTC for $50,000 on the first exchange and sell it for $51,000 on the second, making a profit of $1,000 per BTC.

• Obviously, the process is not as simple, as exchanges have transaction fees and can take time to process withdrawals and deposits, but the general idea is this.