I'm trying to understand how arbitrage works, but I'm having some difficulties based on some restrictions:
- I have markets A, B and C.
- The currencies that are traded are X <-> Y, and X <-> Z.
- The only thing that can be transferred between markets A, B and C is currency X.
- The time it takes to transfer the funds (in currency X) between any market is about 2-10 minutes.
- The opportunity for arbitrage last for about 1 hour.
The exchange rates on market A
- 1 X exchanges for 3.22 Y
- 1 X exchanges for 5.11 Z
The exchange rates on market B
- 1 X exchanges for 3.25 Y
- 1 X exchanges for 5.07 Z
The exchange rate on market C
- Does not exchange X <-> Y
- 1 X exchanges for 4.98 Z
Suppose that exchange A is the exchange with the highest volume and presumably the most accurate exchange rate. How can one take advantage of the arbitrage opportunities if the only thing that can be transferred between exchanges is currency X and it takes 2-10 minutes?