Triangular Arbitrage

How It Works

Within a single exchange, exploit inconsistencies in exchange rates across three trading pairs by cycling (A→B→C→A) to capture the spread. For example, on Binance, if the BTC→ETH→SOL→BTC path returns more BTC than you started with, arbitrage profit exists. The core logic: when the product of A/B, B/C, C/A prices ≠ 1, there's an arbitrage gap.

Suitable Platforms

Suitable exchanges: Binance, OKX (deep liquidity, many pairs). No cross-exchange transfers needed — lowest risk, best for beginners.

Risk Level

Risk: Low. No directional exposure, all operations within one exchange. Main risks are slippage & fees eating profit, and HFT competition making opportunities disappear instantly.

Common Pitfalls

• ⚠Ignoring fees: triangular needs 3 trades, fees are 3x — may turn profit into loss
• ⚠Thin order books: small-cap pairs have shallow depth, large orders suffer heavy slippage
• ⚠Latency kills: manual execution impossible, must be automated