Let me give you a clearer explanation of what cryptocurrency arbitrage trading is all about.
Imagine Mr. Tunde sells his biscuits at a rate of 10 biscuits per naira, while Mr. Mike offers 12 biscuits for the same naira. If you buy biscuits from Mr. Tunde and then sell them to Mr. Mike, you instantly make a profit of N2. Easy, right?
Well, cryptocurrency arbitrage trading works in a very similar way.
In the crypto world, different platforms (or exchanges) may have slightly different prices for the same cryptocurrency. Think of one exchange as Mr. Tunde’s shop, offering digital currency at a lower price. Another exchange, like Mr. Mike’s shop, may be selling that same cryptocurrency at a higher price.
Your job as an arbitrage trader is to spot these price differences, buy the cryptocurrency where it’s cheaper, and then quickly sell it on a platform where the price is higher. That difference is your profit—just like in the biscuit example.