Arbitrage is the practice of buying and selling assets in different markets to take advantage of the differing prices. Learn how traders on Binance P2P use arbitrage to generate income 👇
First, look at the coins in your portfolio. Check their prices on a different exchange. You’ll notice a slightly different price on each exchange, either higher or lower. There’s a variety of reasons for why this happens, including fees, trading volume and liquidity.
Exchanges with low fees and higher trading volume and liquidity, for example, will generally have lower prices. This price difference is where arbitrage comes into play. If you’re a savvy trader, you could profit by buying the coin low on Exchange A and then selling high on Exchange B. Outside of crypto, this practice isn’t new and has been used for decades in traditional markets like stocks and bonds. For example, a stock’s price on the New York Stock Exchange may differ from the Tokyo Stock Exchange.
Arbitrage sounds simple on the surface—buy low sell high. However, you’ll need to consider things like platform trading fees and hidden costs, both of which can quickly turn your potential gains into losses. If you’re looking to get started, consider using, the official peer-to-peer marketplace of Binance. It’s the go-to platform for many reasons. Each transaction comes with zero fees. There’s support for more than 300 payment methods and 70 local currencies.
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