1. | trading
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 bots - which helps stabilize the price of an asset. When an asset is sold too high or too low on any market, arbitrage opportunities appear and traders profit on the differece until the price normalizes.
1.1 > Ex.
Exchange A has a sell order of 1 BCH for $400, exchange B has a buy order of 1 BCH for $405. A trader with accounts on both exchanges can buy the 1 BCH on exchange A, and sell it on exchange B for a $5 profit using this arbitrage opportunity - minus exchange fees
* All terms and definitions may change as the Cryptionary improves