# What is 'arbitrage' trading?

Arbitrage is a trading strategy where you profit when the ***same token*** is priced differently in different places — **buy lower, sell higher.**

On Solana (and in this bot), those “places” are always DEX pools. Since every pool has its own liquidity and pricing curve, pools can temporarily disagree on price — especially during high volume, thin liquidity, or rapid market movements.

Arbitrage captures that gap by executing a short sequence of swaps that starts and ends in the same asset (usually SOL or USDC). If the swaps return more than you started with (after fees), the difference is profit.

Think of it as **price correction with a paycheck**: arbitrage helps pull pools back into alignment, and the arb trader gets rewarded (sometimes handsomely) for being fast and first-to-act.

***

#### **The 10-second version**

Two pools disagree on $FOMO’s price:

* Pool A says $FOMO is cheaper
* Pool B says $FOMO is more expensive

So you execute an atomic swap transaction:

1. SOL → $FOMO (buy cheap in Pool A)
2. $FOMO → SOL (sell higher in Pool B)

If you end with more SOL than you started, that’s arbitrage.

If you don’t, you paid priority fees for character development.

***

#### **Why do price gaps happen?**

Because pools don’t “share” one global price — each pool is its own little universe.

Gaps show up when:

* Someone apes a big swap and shifts one pool’s price
* Liquidity is thin, so price moves hard per trade
* Different pool types (AMM vs concentrated liquidity vs bins/ticks) react differently
* Volatility spikes and everything de-syncs for a few seconds
* Routing pressure (aggregators / multi-hop swaps) pushes one side out of line

Arbitrage is what snaps it back.

***

#### **TL;DR**

Arbitrage on Solana is:

DEX pools get out of sync → bot executes atomic swap across multiple pools → if the loop returns more than it started with, you profit.

If your signals are tight, have a little luck, and execute efficiently — you win.