Cryptocurrencies are traded on hundreds of different exchanges. However, the price of a coin or token often varies depending on the exchange. This is where an arbitrage strategy comes in. Similar to using arbitrage in capital markets, crypto arbitrage is a legitimate way to generate potential profits when an asset is sold at a lower price in one market and at a higher one in another.

How to take advantage of crypto arbitrage?

First of all, look at the coins in your portfolio and compare their prices on different exchanges. They may differ for a number of reasons, including fees, trading volumes, and liquidity.

Prices tend to be lower on exchanges with low fees, high trading volumes, and strong liquidity. Thus, you can earn revenue from the price difference. Being an experienced trader, you can make a profit by purchasing a coin at a lower price on exchange A and then selling it at a higher price on exchange B

This is not a new way of making money. It has long been used on traditional stock exchanges. For instance, the share price on the New York Stock Exchange may differ from that on the Tokyo Stock Exchange.

At first glance, arbitrage trading seems easy to master: buy low, sell high. However, before you start using this strategy, you should take into account some factors such as platform trading fees and hidden costs that can quickly turn your potential profits into losses.