Definition ∞ Arbitrage automation involves the use of computer programs to automatically identify and execute trades that profit from price differences for the same digital asset across various exchanges. These automated systems operate with high speed, capitalizing on transient market inefficiencies before they disappear. The automation eliminates human reaction time, allowing for simultaneous transactions that exploit small price discrepancies. It contributes to market efficiency by quickly equalizing prices.
Context ∞ News regarding arbitrage automation often highlights its role in maintaining price consistency across fragmented digital asset markets and its impact on high-frequency trading. Discussions may center on technological advancements in trading algorithms or regulatory considerations surrounding automated trading practices. The efficiency of these systems directly affects market liquidity and the profitability of manual trading strategies.
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