Arbitration is one of the oldest trading strategies. Its popularity, both among traders
and investors, is the existence of a small risk. The task is to purchase and
simultaneously sell the same or sufficiently similar types of assets.
Before the advent of the Internet, arbitration took place approximately like this. Two
traders kept a constant telephone connection between exchanges in Chicago and New
York. When on one of the stock exchanges (for whatever reason) the price rose
sharply, for example, sugar, and on the second exchange yet, where sugar was more
expensive than it was sold, and bought at the second exchange. After a few seconds /
minutes, when information about price changes came to all market participants, prices
again equalized. And the traders just fixed profits.
Huge states were made on a fairly simple trading algorithm. But he “came to an end”
with the advent of the Internet and a massive transition of exchanges to electronic
commerce. As a result, people occupied robots. Today they are happy to arbitrate
price deviations of 0.01% and even 0.001%, while people earned up to 10% on one
Traders of classic stock and commodity markets remain nostalgic about times that
will never return.
However, the arbitration did not die definitively. He again in favor, thanks to the
appearance of crypto currency. All of us see that right now quotations bitkoyna on
different stock exchanges differ from each other by 1-5%. And for some of the
Altocums, the difference can sometimes be as high as 50%