Intra-exchange arbitration of cryptocurrencies
In intra-exchange arbitration, transactions with cryptocurrency are conducted on one exchange, but in different trading pairs, using another cryptocurrency. For example, change USDT to ETH, then change ETH to BTC, and again buy USDT for BTC. You can perform such operations correctly after calculating fees for all exchanges. The advantage of this type of arbitration is that there is no commission for the output of the cryptocurrency.
Cryptocurrency Interstock Arbitration
In cross-exchange trading, cryptocurrency can be bought on one exchange and sold on another at a higher rate. As a rule, the exchange-to-exchange difference is small and no significant profit is made.
Good profits can be made with high trading activity and abrupt volatility, for example, when players sell cryptocurrency for an impressive amount of money on a particular exchange, affecting the exchange rate. Such arbitrations were time-limited and could last only a few hours. It is almost impossible to find out about such transactions in advance, so it makes sense to analyze simultaneously graphs of one trading pair on different platforms.
What you need to enter arbitration
In order to start arbitration transactions, it is necessary to monitor the rates on different exchanges and predict their dynamics. Before making a transaction, you need to study the size of commissions on exchanges. Since during the arbitration all transactions should be performed as quickly as possible, you need to learn to work according to the rules of different exchanges and take into account the speed of transactions.
Cryptocurrency arbitration is generally suitable for experienced traders who have conducted similar transactions with other assets. We need to focus on internal exchange rules. In addition to commissions, there may be other limitations, for example, not every site can quickly withdraw purchased assets.
Algorithmic systems for arbitration
For a long time no one is engaged in the arbitration manually, to do this they use the software for automatic conclusion of transactions, so-called trading bots. To create such a program you need the experience of writing software to connect to the site where asset trading takes place, and the presence of a trading strategy. For high speed of receiving and sending commands, trading bot requires a powerful server and high speed communication channel.
When calculating the strategy for trading software it is necessary to consider:
- the difference between cryptocurrency prices;
- level of liquidity in the glass;
- Speed of replenishment and withdrawal on the stock exchange.
Selecting a bot for trading
Choosing a good automated software for arbitration is very difficult, so you need to be very careful when working with the trading bots. Be aware that the trading bot works only on «own» certain exchanges.
When buying software, you should be afraid of trading bots that will steal money from the account of the owner. It will be difficult for a beginner to test the bot for honesty, so you need to very carefully understand the functioning of the program.
Thanks to the availability of a wide range of algorithmic systems for arbitration on the market, it is possible to quickly master it. However, it is important to consider all risks and not make mistakes that can cause money to be lost.
Crypto arbitration requires special skills of perseverance and care, it will take a long time before they appear, because big money without trying to earn.