Real Life Example of an Arbitrage Case
Here is a real-life example of how a Trade Agent can use an arbitrage opportunity.
Alex is an MT Trade Agent who is regularly making money on arbitrage trades.
He recently found a small shop where beautiful handmade shoes are made. Alex strongly believes these shoes could be sold at a higher price abroad.
Alex is creating a proposal on MT Market to sell these nice shoes. He knows that he can buy the shoes at the shop for €150. He is also confident that he can sell them for more, so he puts a price tag of €210 which is 40% higher.
A few days later Sophie, a regular MT Market user, discovers these shoes and decides to buy a pair. She buys them on MT Market, sending the payment on the smart contract automatically created.
Alex is notified about Sophie’s request. He now has to buy the shoes from the shop and deliver them to Sophie. However Alex has many other trades going on and he would like to take advantage of the credit option that MT offers, among other crypto financing services.
As an MT Trade Agent, Alex has access to several financing options. He would like to receive his funding in bitcoin. ModulTrade approves his request, and €150 worth of bitcoin is sent to his MT Wallet. Alex now converts his bitcoin into euros with the help of his gateway provider, one proposed by MT, and buys the shoes at the shop.
Alex ships the shoes to the buyer. As the product is delivered, the money is released from the smart contract to his own wallet. Now Alex can pay back his loan of €150 in cryptocurrency to MT with the payment he got from the trade. He keeps €60 minus the delivery cost, as the profit, he made from selling the product at a higher price.