Cryptocurrency Trading Strategy: How Does Arbitrage Work?

Arbitrage is a simple cryptocurrency trading strategy where in you buy a cryptocurrency on an exchange platform that quotes low price for the token that you are aiming to trade with and sell it on another crypto-exchange platform where the price is high for the highest bidder.

It’s a forthright and lucrative cryptocurrency trading strategy on the exchange, which requires only steady monitoring of exchange values. However, including possible pay-outs, you need to take into account the commission that some exchange platform charges. If the variance in the exchange rates of one coinage on exchanges is 2–3% or more, the trade can be lucrative. In case the exchange variance is less than 2%, then the turnover will be minimal, or it will not be at all because of the charge.

Moreover, arbitrage traders can profit as there are quite low buyer figures and competition — when you liken it to the traditional marketplaces.

Let’s say you’ve bought 20 XLAB’s for 700 odd Dollars at some exchange, moved it to your wallet and have trade it instantly on alternative exchange for $800. You will profit off of this trade.

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