Arbitrage is making the profit by buying and selling the same coin on two different exchanges. Cryptocurrency arbitrage allows you to take benefit of those price differences, buying crypto on one exchange where the price is low and then immediately selling it on another exchange where the price is high.
Arbitrage is the concurrent purchase and sale of an asset to revenue from a difference in the rate. It is a business that profits by utilizing the price differences of identical and the same financial instruments on other markets or in other forms
Arbitrage is the simultaneous selling and buying of an asset on distinct markets to profit from the amount difference between those markets. In a highly simplified example of how cryptocurrency arbitrage works, you would search for a particular coin that is cheaper on Exchange X than on Exchange Y. You then buy the coin on Exchange X, sell it for a higher rate on Exchange Y and pocket the difference.
The theory of arbitrage trading is not a new one and has continued in stock, bond and foreign exchange markets for more years. However, the development of quantitative systems designed to spot cost differences and execute trades across isolated markets has put arbitrage trading out of reach of many retail traders.
But arbitrage possibility still exists in the world of cryptocurrency, where a rapid surge in trading volume and inefficiencies between exchanges source price differences to transpire. Bigger interchange with higher liquidity effectively drive the cost of the rest of the market, with smaller exchanges following the prices set by their larger correlative part. However, smaller exchanges do not rapidly follow the prices set on larger exchanges, which is where opportunities for arbitrage arise.
Cryptocurrency Bots are continuing to develop in refinement and functionality with new members entering the market routinely. Trading bots are computer programs that use many indicators to identify trends and automatically execute trades. While algorithmic trading software has been used by hedge funds in the equity, commodity and currency markets, trading bots for personal investors first appeared in the foreign exchange trading space. They have quickly made their way into the crypto asset market.