An Automated Trading Platform

Why Arbitrage Bots Play Important Role in Cryptocurrency

Whether you happen to trade in cryptocurrency or stock market, arbitrage stands out to be the least risky and pretty straightforward method. This is the reason why newbies all over the World prefer arbitrage exchange trading. This traditional (yet growing) trend has given rise to the use of trading bots, which do not only diminish the hassle for the user but bring efficiency to the entire process as well. Hence, they could be used to increase Return on Investment.
How does arbitrage work?
Well, it is pretty simple. Whether you are trading in stocks or cryptocurrency, the underlying concept is same. However, due to the technical differences, there are some facts to be considered (e.g. crypto is more volatile than stocks).
Basically, in simplest terms, it just refers to the buying and selling of an asset, simultaneously. For instance, let’s consider two arbitrage exchanges.
Let’s assume that the price of a token on ‘exchange X’ is $10 and the same token has a price of $10.05 on ‘exchange Y’.
Now if you buy the token form exchange X and sale it on exchange Y immediately, you would earn 5% profit per share. It may seem less to some of you, but just imagine it happening on an enormous scale. The profits would surge!