The practice of exploiting price differences across multiple markets to buy low from one, and sell high in the other for profit.
Arbitrage is a common trading technique - especially with automated trading strategies - which help stabilize the price of an asset. When an asset is sold too high or too low on markets, arbitrage opportunities appear and traders profit on the difference until the price reaches an equilibrium.
Exchange A: 1 DOGE for $0.06
Exchange B: 1 DOGE for $0.08
Trader: Buys 1 DOGE on A, and sells 1 DOGE on B at the same time. Securing a $0.02 profit from arbitrage. 🎊
* All terms and definitions may update as the Cryptionary improves.
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