Course Content
What Is Arbitrage Trading?
Arbitrage trading is a relatively low-risk trading strategy that takes advantage of price differences across markets. Most of the time, this involves buying and selling the same asset (like Bitcoin) on different exchanges. Since the price of Bitcoin should, in theory, be equal on Binance and on another exchange, any difference between the two is likely an arbitrage opportunity. This is a very common strategy in the trading world, but it’s mostly been a tool of large financial institutions. With the democratization of financial markets thanks to cryptocurrencies, there might be an opportunity for cryptocurrency traders to take advantage of it, too.
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What Is Arbitrage Trading?
About Lesson

What if you could guarantee yourself a profitable trade? What would it look like? You’d have to know before even entering the trade that you were going to make a profit. Anyone who could have that kind of edge would exploit it until they no longer could.

While there’s no such thing as guaranteed profit, arbitrage trading is the closest you’ll get. Traders compete ferociously to get the opportunity to enter these types of trades. For this very reason, profits are generally very slim in arbitrage trading and depend heavily on speed and volume per trade. That’s why most arbitrage trading is done by algorithms developed by high-frequency trading (HFT) firms.