Arbitrage
Everything about our Exchange/Market Arbitrage
To explain arbitrage and what an arbitrage bot is able to do, it is necessary to explain market inefficiencies first. Market inefficiencies are price differences for a specific asset between different marketplaces.
Taking it to the crypto sphere, this can be translated into buying a cryptocurrency in exchange X, and selling it for a higher price at exchange Y. by doing this, a trader can profit from price differences among exchanges. Inefficiencies, that in the cryptocurrency world, have proven to be significant at times.
However, this is not the only way a trader can carry out arbitrage trading. There is another way to implement this trading strategy, it is called triangular or intra-exchange arbitrage. This practice consists of buying three different coins to profit from market inefficiencies on the same exchange. We will explain this phenomenon more indepth in this course.