What is Arbitrage?
Arbitrage is a trading strategy to obtain profit from the cryptocurrency’s different prices among exchanges. Buying on the exchange that offers a low price and selling it in another exchange where the price is higher enough to get profit.
In recent times, the interest in Cryptocurrency Arbitrage has been increasing a lot, which is understandable knowing the benefits that can be accomplished if you do it right, that’s why we decided to work with this strategy.
It is a fact of liquidity; the trading volumes are different depending on the exchanges. Larger exchanges with higher volume have more liquidity of coins than the smaller ones, this higher liquidity usually results in cheaper prices on larger exchanges, this leads to arbitrage opportunities. Buy on this big exchange that is selling cheaper and simultaneously sell on the other one.
The profit that is obtained by this transaction is reduced because of the exchange fees. There are fees for trading cryptocurrencies, fees to transfer them, and fees that involve blockchain network. Besides fees, existing difficulties for those who want to arbitrage manually, transactions must be done instantly, and it results to be very complicated to do it by yourself and catch all the opportunities that are available throughout the day.