Arbitrage is not free money — it is compensation for speed, capital, and risk-bearing. The moment a price gap appears, dozens of bots race to close it. The winner is usually the fastest, and the loser is often the one who arrives late and trades at a worse price.

Adverse selection means your fill happens precisely when the market is moving against you. If your order rests on the book and gets hit, it may be because informed flow knows the price is about to move further.

Latency arbitrage: exploiting stale quotes across venues before they update.
Queue position: being first in the limit order book determines who gets filled.
Cancel-replace races: market makers pull quotes when they detect toxic flow.
Colocation: renting rack space next to the exchange matching engine to shave microseconds.

Venue	Typical round-trip latency	Edge needed to profit
Colocated (same DC)	10–100 microseconds	~0.5 bps
Retail API (cloud)	20–200 milliseconds	~5–15 bps
Manual trading	1–5 seconds	~30+ bps