From: alexhormozi
Arbitrage is a term used to describe the practice of selling the same item between two different markets because they are priced differently [00:06:47]. This method allows an individual to profit from the price discrepancy.
How Arbitrage Works
The fundamental principle of arbitrage involves buying an asset or item in one market where its price is lower and simultaneously selling it in another market where its price is higher, thereby capturing the difference [00:07:19].
Examples of Arbitrage
- Cryptocurrency: If Bitcoin is priced at 19,100 in the U.S. market, one can purchase Bitcoin in Japan and sell it in the U.S. to make a $100 profit per unit [00:06:51].
- Lending Money: Arbitrage can also apply to lending money. If one can borrow money at 1% interest and lend it out at 6%, the 5% difference represents the profit [00:07:07].
- Physical Products: This concept extends to physical products where price differences exist between markets [00:07:06].
Finding arbitrage opportunities is a strategic way to generate significant income by leveraging existing price disparities [00:07:22].