Is arbitrage truly low risk? First, understand the legality and risk framework
Many traders, when exploring cryptocurrency arbitrage, first ask: Is this trading method legal? The answer is yes—cryptocurrency arbitrage is essentially a legitimate trading activity that exploits market price differences, involving no illegal operations. You are simply buying and selling the same asset, capturing price differences across different scenarios.
But legality does not mean zero risk. Although arbitrage is indeed less risky than traditional trading, there are still practical obstacles such as execution risk, fee erosion, withdrawal restrictions, and more. This is why many traders end up losing money in seemingly simple arbitrage opportunities.
Why arbitrage is called a low-risk strategy
Compared to other trading methods, cryptocurrency arbitrage has inherent safety:
Traditional trading requires prediction—traders must perform technical analysis, fundamental analysis, or sentiment analysis to judge price trends