Crypto Arbitrage, Cryptocurrency

Why is crypto arbitrage considered a low-risk strategy?

You might have noticed that, unlike day traders, crypto arbitrage traders do not have to predict the future prices of bitcoin nor enter trades that could take hours or days before they start generating profits.

By spotting arbitrage opportunities and capitalizing on them, traders base their decision on the expectation of generating fixed profit without necessarily analyzing market sentiments or relying on other predictive pricing strategies. Also, depending on the resources available to traders, it is possible to enter and exit an arbitrage trade in seconds or minutes. Bearing these in mind, we can therefore conclude the following:

  1. The risk involved in crypto arbitrage trading is somewhat lower than other trading strategies because it generally does not require predictive analysis.
  2. Arbitrage traders only have to execute trades that last for minutes at most, so the exposure to trading risk is significantly reduced.

However, this does not necessarily mean that crypto arbitrageurs are completely free from risks.


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