Cryptocurrency arbitrage is an investment strategy that profits from exploiting price differences of assets across different markets. It is a key technique used by many professional traders in the crypto market, with funding rate arbitrage, spot-contract arbitrage, and futures arbitrage being the three most common forms. This guide will help you understand how to flexibly apply arbitrage strategies in cryptocurrency trading.
Core Principles of Arbitrage Trading
Arbitrage trading allows traders to quickly seize market opportunities without the need for API automation. The key is that you can monitor the price movements and liquidity of the same asset across different markets simultaneously, then place opposite orders to achieve higher execution accuracy through optimized execution processes.
Cryptocurrency arbitrage mainly has two application directions: one is funding rate-based arbitrage, and the other is price spread arbitrage. Both strategies have their own characteristics and are suitable for different market environments and trading objectives.