Arbitration - what is it and is it worth playing on the stock exchange?

Arbitration - What is it?
Arbitration is nothing more than buying an asset on a market where its price is lower in order to simultaneously resell that good on another market where its price is higher.

Putting this into practice, it is enough to imagine a situation where, for example, on the BitBay exchange, Bitcoin can be purchased for USD 10,000, while, for example, on Binance, the price of this cryptocurrency is USD 10,100. This could be for a number of reasons. For example, from a higher volume and demand in this market, which translated into a price jump. In any case, it looks like a fairly simple way of earning money. I buy one BTC on a Polish platform, then I send a digital asset to Binance and sells there at a higher rate. Great! Even taking into account the fees of both exchanges, I made several dozen dollars purely. But is it really that simple?

Dreams and reality
Yes, arbitration is a great way to make money in the stock market, easy to understand and implement. In the market, however, nothing happens without risk. Firstly, if the difference between the prices on individual exchanges is low, the condition for earning profit is the precise calculation of transaction costs. If this difference is greater than them, the investor will earn by buying the product on the cheaper market and selling it on the more expensive market. Otherwise, it may lose.

There is, however, another concern. BTC transfer takes several dozen minutes (in the case of other cryptocurrencies, it is shorter, so the risk that we will now describe is slightly lower). So before we manage to transfer funds from BitBay to Binance, the BTC price on the latter may already change. If it grows even more - great! We will earn even more! Worse, when the traffic goes the other way, it will reduce our earnings or even make it impossible.

Benefits
Instant profits
Unlike the most popular method of trading cryptocurrency, where it is stored until its price goes up, arbitrage brings the trader immediate profits. In the case of arbitration, the most important issue is time, so with efficient operation, profits appear in the portfolio immediately and you do not have to worry about drops and increases in prices on stock exchanges.

A large selection of exchanges
There are hundreds of cryptocurrency exchanges now, so we have a wide choice. It is also a great chance for arbitrage traders to find the most profitable exchanges between exchanges.

Price volatility
While the volatility of cryptocurrency prices is a trait that makes investors sleepy, it proves to be an advantage when it comes to arbitrage. Large fluctuations bring about differences in prices, which are, after all, the most important issue in this method. Arbitration traders can therefore count on continued profits when trading assets.

Find more information here: Arbismart Arbitrage Trading