Arbitrage: Turning market gaps into cash! 🙂↔️
Imagine you have three toy stores in your town.
→ Store A sells a teddy bear for $10
→ Store B sells the same teddy bear for $15
→ Store C sells the teddy bear for $12
You have $10, so you go to Store A and buy the teddy bear for $10.
Then, you take it to Store B and sell it for $15.
Now, you have $15, which means you made $5 profit without doing much work!
This is called arbitrage! Buying something cheaper in one place and selling it for more in another.
Different types of arbitrage
→ Spatial Arbitrage (Buying on One Exchange, Selling on Another)
Imagine Bitcoin (BTC) is selling for $50,000 on Exchange A but $50,200 on Exchange B.
You buy 1 BTC on Exchange A for $50,000. You send it to Exchange B and sell it for $50,200.
You profit $200 (before fees & transfer costs).
💀 Challenge
Transfers between exchanges can take time, and price differences may disappear before you complete the trade. 1 reply
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