A guide on OVEX's Arbitrage Service
The OVEX Arbitrage Service is a fully hedged product that is designed to exploit mismatches in the price of cryptocurrency in U.S. Dollars (USD) and South African Rands (ZAR). Over the past 4 years, local ZAR cryptocurrency markets have traded at an average premium of between 3 and 5% to offshore USD markets.
The Arbitrage Service enables OVEX customers from South Africa to use their annual Single Discretionary Allowance (SDA) of R1million and Foreign Investment Allowance (FIA) of up to an additional R10million to earn arbitrage trading profits.
Arbitrage is an age-old concept and is not confined to the world of cryptocurrency. It simply involves the process of buying an asset in one market at a discount and selling the same asset immediately in another market at a premium. Because investors are not forced to bet on market movements they take on little risk – instead, they merely exploit market dynamics.
Because Arbitrage is a non-speculative investment – it proves to be low-risk. This reigns true provided you use an exchange like OVEX that has designed an arbitrage product that hedges out all market risk.
The diagram below shows a brief overview of how OVEX's Arbitrage Service works