Why Are Arbitrage Opportunities Usually Short-Lived? ⎊ Path

Why Are Arbitrage Opportunities Usually Short-Lived?

Arbitrage opportunities are short-lived because they are quickly exploited by high-frequency traders and algorithmic systems. As traders execute the trades to profit from the mispricing, their actions simultaneously push the misaligned prices back toward equilibrium, eliminating the profit opportunity almost instantly.

How Does the Concept of “Market Efficiency” Relate to the Persistence of Arbitrage Opportunities?

How Does a Trader Restore Their Margin above the Maintenance Margin Level?

What Is a ‘Back-Run’ and How Does It Differ from a Sandwich Attack?

When Is a Trader More Likely to Use a Market Order despite the Cost of the Bid-Offer Spread?

What Is the Typical Duration of Backwardation in Crypto Markets?

How Does Arbitrage between the Spot and Futures Market Help Maintain Price Equilibrium?

How Does the ‘Oracle’ Update Frequency Affect the Pricing Accuracy for L2 Derivatives?

How Do TWAP and VWAP Algorithms Differ as Execution Strategies for Minimizing Market Impact?

Glossar

Arbitrage Opportunities

Exploitation ⎊ Arbitrage Opportunities in crypto derivatives arise from temporary price dislocations between related instruments across different venues or between the derivative and its underlying spot asset, demanding rapid, automated execution to capture the spread.