Spatial Arbitrage is trading (or investing) by taking advantage of price differences between 2 platforms in order to make a profit. The price differences are also called arbitrage spreads.
In order to execute spatial arbitrage, the trader would first have to identify an opportunity in the market to execute his trades. This would require extensive knowledge of the liquidities and volumes of various exchanges. What the trader will be looking for is a specific cryptocurrency which is trading at A lower price on one exchange relative to it's trading price on another exchange. The trader would buy the cryptocurrency at the lower price on the exchange trading at A lower price and then sell on the exchange trading at the higher price.
As an example say a trader spots a price difference in Bitcoin Cash trading between trading platform A and trading platform B. On platform A the price of 1 bch is $262.19 while on platform B the price is at $308.47 a 15% difference (which is rare usually differences are usually lower than 5%). The trader would buy bch at $262.19 on platform A then transfer the funds to platform B to sell at $308.47 for a tidy profit of $46.27. The advantage would be that the trader would not have to wait for the price to fluctuate to make profit they would instantly be in profit on executing the final trade. The trader would however have to be quick in executing the trades as spreads are constantly changing as such the opportunity could disappear in minutes if not seconds also the trader would want to minimise slippage. The trader would have to ensure that they make enough profit to cover trading and transfer fees.
Another way of carrying out the same trade would be to do the buying and selling simultaneously on both platform A and B. The trader would buy on platform A at $262.19 while at the same time selling bch he already has at $308.47 on platform B. In this way slippage is minimised and transfer fees eliminated.
Arbitrage is a good method of making money when price fluctuations in the market aren't many such that other day trading methods aren't viable. Again, the trader has to ensure they have enough volume to make profit.
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