Asset Management
Arbitration between exchanges, also known as cross-exchange arbitrage, involves exploiting price differences of the same asset across different trading platforms.
Our traders monitor various exchanges for the same asset, such as cryptocurrencies, stocks, or commodities. They look for instances where the price of the asset on one exchange is significantly different from its price on another exchange. These differences can arise due to factors like varying levels of supply and demand, exchange-specific liquidity, or market inefficiencies.
Traders assess whether the price differential is large enough to cover trading fees, withdrawal fees, and any other costs associated with executing the arbitrage trade. Additionally, they consider the speed at which they can execute trades, as prices may change rapidly, especially in volatile markets like cryptocurrencies.
Once a profitable opportunity is identified, traders execute a series of buy and sell orders across the exchanges involved in the arbitrage. They typically buy the asset at the exchange where it’s priced lower and simultaneously sell it at the exchange where it’s priced higher. This process may involve transferring funds or assets between exchanges, which can introduce additional time and cost considerations.
Our traders use automated trading bots or algorithms to execute arbitrage trades swiftly and efficiently. These algorithms continuously monitor multiple exchanges and automatically execute trades when profitable opportunities arise. Automated arbitrage can help traders capitalize on fleeting price discrepancies that may be imperceptible to manual traders.