Quote from: Peter Lambert on February 28, 2013, 05:14:13 PM

Quote from: darkmethod on February 28, 2013, 04:52:39 PM

Wouldn't arbitrage require a rebalancing of the funds at some point.

If I were to simultaneously purchase BTC on one market and then USD on the other for a profit overall, then I wouldn't be able to take advantage of the situation again until the markets fluctuate to the point where the exact opposite position provides a favorable outcome.

I apologize for my lack of understanding. I'm truly trying to wrap my head around what happens after the initial simultaneous sales have completed.

It depends on the nature of the markets. If market A is ALWAYS higher price than market B, then yes, you will have to transfer currency between the two markets. If the price difference is fleeting and varies over time with sometimes A and sometimes B being higher, then you could just leave your money where it is and arbitrage the opposite direction when the price balance switches.

I have been thinking that as the Ripple system grows, it will allow people to move various currencies from one exchange to another, making arbitrage easier. Right now it is easy to move btc from one exchange to another, but harder (higher fees and wait times) to move USD between exchanges.

Thanks. That makes sense to me. I appreciate it.