Currency arbitrage.

A broader, economic understanding of the term arbitrage involves profiting from trading a single commodity. In fact, it's nothing more than simple speculation.

Currency arbitrage is the process of making a profit from differences in exchange rates, and it does not necessarily require a change in the exchange value of the currency chosen for the transaction.

The execution of this type of operation is considered complete when the opposite transaction to the first one has occurred.

There are several options for currency arbitrage.

Territorial.

Profit is generated from the price difference for the same currency in different banks, regions, or countries. This is when you can buy currency cheaper in one place and sell it for more in another.

For example,

the minimum price for buying a US dollar in Moscow is 27 rubles per dollar. However, in Kaluga, this currency can actually be sold for 29 rubles per dollar.

As a result, a profit on a $1 million transaction would bring the organizer another million rubles.

This type of currency arbitrage is possible due to the difference in supply and demand for the currency. Based on this example, we can say that in Moscow there is an excess supply of US dollars, while in Kaluga there is increased demand.

Temporary.

As we know, the exchange rate never stands still; the currency market is constantly changing.

This is the least expensive way to profit from currency trading. To implement it, simply buy a specific currency and wait for its rate to rise.

Temporary currency arbitrage is more widely used in forex trading. While in everyday life you can only buy a specific currency in the hopes of its appreciation, there are two possible trading options: buying or selling. This significantly expands your income potential.

When selling, a forex trader opens an order to sell a specific currency in a specific volume, without necessarily actually delivering the currency. After some time, when the exchange rate drops, they buy the currency at a lower price and close the previous trade. The entire transaction is completed with a single order.

You can read more about forex trading in the article " Playing Forex or Making Money on the Exchange Rate ."