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While arbitrage is not a trading strategy solely linked to crypto, there are countless opportunities to put it to use in the blockchain ecosystem. But before you consider crypto arbitrage trading, it’s important to properly understand why these trading opportunities exist to begin with. In this guide Ledger Academy will unpack the concept of crypto arbitrage, so that you can understand the underlying mechanics of this approach before you dive in.
Let’s start with the basic
What Is Crypto Arbitrag
Crypto arbitrage is a method of trading which seeks to exploit price discrepancies in cryptocurrency
To explain, let’s consider arbitrage in the traditional sense
Arbitrage is a trading strategy in which a trader buys and sells the same asset in different markets, profiting from their differences in price
For example, someone who uses arbitrage trading strategies within the footwear market may buy a pair of Air Force 1s on one platform for $130 and then sell them immediately on a different platform for $140. The trader gets to pocket the $10 differenc
In a similar sense, an article found in a “thrift” store might be marked at low price; but that same article may fetch a premium on a dedicated vintage marketplace. The key takeaway? The same asset may have differing values on separate markets, and there is always someone waiting to take advantage of that difference. Of course, crypto assets are no exception to this trading strateg
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How Does Crypto Arbitrage Wor
To understand how crypto arbitrage trading works, firstly, you need to know that crypto exchanges can have slightly different prices for specific assets, as well as different methods of determining those prices. Since crypto prices tend to fluctuate and the market is active 24/7, there will be countless minute discrepancies in crypto asset prices across the market, and arbitrage traders seek to take advantage of them
To understand the complexities of crypto arbitrage trading, firstly it’s important to understand how different exchanges determine prices of cryptocurrencies. Not all exchanges calculate cryptocurrency prices using the same method, which creates opportunities (pricing discrepancies) across different platforms. Let’s dive deeper into this now.
WATCH HERE .k?y.e.. . .e?s:r into this now.