What is Arbitrage Strategy Crypto Market?

Hear Arbitrage often but don't know what it means? You visited the right article. Arbitrage may be familiar to cryptocurrency traders. The word Arbitrage is a strategy commonly done in the market. What is an Arbitrage Strategy? See more in this article.

What is Arbitrage?

Trading strategies take advantage of price instability in two different crypto markets is Arbitrage. The person who performs the arbitrage strategy is called an arbitrageur.

The problems that are often include:

Not only find the price difference but must be able to trade it nimbly. Because those who play other arbitrageur strategies can see the difference in price or commonly called spreads quickly, therefore the opportunity of arbitrage can be taken quickly by other arbitrageurs.

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How to do Arbitrage.

Arbitrageur buys crypto at a moderately low price on the market. Then create multiple accounts. In each account has assets, with the aim that when wanting to do Artbitrage do not have to bother sending crypto to other market exchanges. There is also an Arbitrage type as summarized in this articles.

Arbritage Type

It turns out that this Arbitrage Strategy has various types. Below are the 2 most commonly used types. Curious? Just check it out.

Arbitrage Exchange is commonly known as The Arbitrage Exchange Strategy.

Prices on various exchanges (markets) are always different, this is due to crypto assets that are always volatile and experience a rapid decline or price increase. Because of this, arbitrageur players exist to take advantage of the rapid price changes by buying on exchange A and then selling it on exchange B.

Example Case Study :

For example the price of ETH on exchange A is 1000$ and the price of ETH on exchange B is 1100$, Arbitrageur buys 1 ETH on exchange A then sells 1 ETH on exchange B and gets a profit of 100$.

Triangular Arbitrage

Triangular Arbitrage is a type that plays by exchanging each other from 3 cryptos whose prices and types are different. This type is popular among Arbitrageur by utilizing crypto price differences in 1 market Exchange.

Example Study Case:

First buy BTC, then sell BTC to buy ETH. ETH sold and then bought BNB, Then back to the beginning BNB sold and then bought more BTC.

Risk Arbitrage Strategy

Although arbitrage is low risk, it still needs precision in a very short time.

The risk of Arbitrage trading strategy is low, all it takes is thoroughness and speed when the price is not balanced in a short period of time. The factor is because individuals in each market always move the price. Professional traders compete for arbitrage by using bots so that manual arbitrage will lose quickly.

And remember to be an Arbitrageur don't forget to take into account his exchange tax from Exchange Market A to Market B.

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Conclusion :

Arbitrage strategies are used by many traders because of the effect tips for obtaining large profit opportunities. The thing to note when Arbitrage is the need for speed and a very large capital in order to quickly profit.