A triangular arbitrage bot is an automated trading system that uses price disparities between three currency pairings on the same exchange to create risk-free profits. It uses a three-step trading cycle to change one asset into another and then back to the original asset, profiting from price inefficiencies.

How It Works:
A triangular arbitrage bot exploits minor price differences between three currency pairings on the same exchange. It uses a three-step trading cycle to generate profit without relying on market trends.
Detects price discrepancies - The bot constantly monitors the exchange rates of multiple trade pairs to detect price discrepancies. It looks for scenarios where converting indirectly yields a higher rate than straight conversion.
Calculates profitability - Ensures that executing all three trades will result in a net gain after fees.
Executes trades quickly - Completes all three transactions in milliseconds, locking in profits before the market corrects itself.

This post was edited by Aana ethan at March 21, 2025 4:26 AM PDT