How to make R100k with arbitrage like a savvy investor

To start off, let's define what arbitrage is. Arbitrage is when investors take advantage of a product that is trading at different prices in different markets.

- Paul Roux

Let's look at an example: Packet of NikNaks in South Africa = R15 Packet of NikNaks in US = $1 = R18

How to arb? Buy cheap, sell expensive.

Easy as that. In this example: Buy in SA at R15 (the cheaper market) and sell in the US at R18 (the more expensive market), and you'll make a profit of R3 per packet of chips.

How do we do it?

While buying and selling NikNaks sounds like something I'd genuinely want to do for a living, there is a faster, cheaper and more scalable way to do it: crypto.

First, bitcoin in the US is slightly cheaper than it is in SA.

There are a few reasons for this (story for another day), but the point is that there is a slight price difference that can be exploited. Here's how we do it:

1. Exchange rands for dollars at a local bank (eg Capitec);

2. Send dollars to a US crypto exchange (eg Coinbase);

3. Buy bitcoin with dollars;

4. Send bitcoin to an SA exchange (eg Luno); and

5. Sell bitcoin for rands.

= PROFIT

And then? Repeat. Over and over again.