An arbitrageur is a type of investor who exploits pricing inefficiencies between two different markets.
An arbitrageur is a type of investor who exploits pricing inefficiencies between two different markets. Arbitrageurs are willing to invest capital in a market where they see opportunity, but only if it offers risk-neutral profit. They have a high degree of financial acumen and willingness to take risks.
There are different ways that arbitrageurs make money. However, they all depend on the completion of transactions quickly.
Long-Term Price Inefficiencies – Arbitrageurs can make money when they see a long-term price inefficiency. For example, if you see that the price of gold is currently low compared to the price of silver, it may be an indication that silver is overvalued compared to gold. Arbitrageurs make money by buying cheaper assets and selling expensive ones.
Short-Term Price Inefficiencies – Arbitrageurs can also make money when they see a short-term price inefficiency.
Crypto arbitrage works in a similar manner as other arbitrages and occurs when an arbitrageur buys a coin in a specific pair at a lower price from one platform and sells it at another at a higher price.