#ArbitrageTradingStrategy Despite the fact that arbitrage trading is considered a low-risk strategy due to the exploitation of temporary price discrepancies, it can lead to significant losses in conditions of extreme market volatility. A classic example is the collapse of the hedge fund Long-Term Capital Management (LTCM) in 1998, which actively used statistical arbitrage. The fund bet on the convergence of prices of U.S. Treasury bonds, using enormous leverage (borrowed funds exceeded equity by more than 20 times). Unforeseen market events, including the Russian debt crisis, led to price discrepancies, causing billions of dollars in losses and requiring intervention from the U.S. government to prevent a systemic financial crisis. This shows that even "risk-free" arbitrage strategies can be vulnerable to rare but catastrophic market shifts.