Arbitrage transactions are a type of transactions during which an asset is bought in one place and simultaneously sold in another. Anyone who has watched the 1995 film Rogue Trader remembers the situation when Nick Leeson, in a telephone conversation with his colleague, performs a similar operation on the stock exchanges in Singapore and Tokyo. Such transactions are possible when the price of the same asset differs in different markets. In the case of the NIKKEI index, which was traded by Nick Leeson, the difference was only a few points, and in order to make a tangible profit, it is necessary to make transactions for a very large sums. In the case of Bitcoin, things are better.
Let's take a look at the market situation on the Bitcoin exchanges at the current time:
- BTCChina - 6233.01 CNY or ~ 1023 USD
- MtGox - 1070 USD
- BitStamp - 1022.50 USD
- BTC-E - 905 USD
I think that everyone, looking at these numbers, wondered why not sell Bitcoin on one exchange and at the same time buy on another. After all, in fact, there are no risks associated with such operations. And if everything is so simple, then why are exchange rates still so different, because such arbitrage deals should have equalized them long ago.
To answer these questions, it is necessary to understand how exchanges actually work and what causes such distortions.
- Withdrawal deadlines. Imagine depositing 100 BTC to MtGox and 107,000 USD to BTC-E and making trades. As a result, you have 107,000 USD on MtGox and ~118 BTC on BTC-E. It would seem that this is the profit - 18 BTC. But that was not the case, you still need to withdraw dollars from MtGox, and this may take 3 months. As a result, we can only carry out 4 such operations per year. It would seem that 9% * 4 = 36% per annum is also not bad, but there is a risk that problems with payments on MtGox exist for a reason and, ultimately, the money may not be withdrawn at some point. Accordingly, this exchange "disappears" and it becomes clear why there is such a high rate.
- Withdrawal methods. There is only one universal way to transfer funds from one exchange to another - this is bank transfer. Both in Ukraine and in the Russian Federation (I think that it is the same in other CIS countries) there is no opportunity to freely exercise international operations without arousing the interest of tax and other authorities. As for Ukraine, any transfer abroad must be accompanied by a NBU license for this particular transfer, and this license can be obtained for several months. The same goes for receiving funds. The bank may request documents proving the legitimacy of the transfer. In addition, there is still a mandatory sale of 50% of foreign exchange earnings.
The only way out in this situation is to open an offshore company with nominee shareholders and a foreign bank account open to this company. The company and nominee shareholders are necessary because, by law, it is impossible to own assets and bank accounts without notifying the state. This is possible only for deputies))). Therefore, those who are serious will have to shell out several thousand dollars, which immediately cuts off small speculators.
In my opinion, the best solution would be to open an account in European bank and arbitrage on the BTC-E and BitStamp exchanges. Firstly, BitStamp has the shortest withdrawal times in Europe (1-2 days). And, secondly, the BTC-E bank account is also located in Europe, which should simplify money transfers.
- Calculation. Let's now calculate how much money we will earn with a turnover of 10,000 USD. With 4.89 BTC on BitStamp and 5,000 USD on BTC-E we are doing trades. As a result, on one exchange we get the same 5,000 USD, and on the other ~ 5.525 BTC. We convert the difference of 0.635 BTC into dollars at the BitStamp rate and get ~ 650 USD, from which we deduct 0.5% commission for transactions, 1% for deposits on BTC-E, 15 USD for withdrawals from BitStamp and another 15 USD for banking operation by our transfer to BTC-E. In total, according to rough calculations, we will have 600 USD of net profit, that is, 6% of the capital. BitStamp withdraws money in 1-2 days, BTC-E officially starts in 7-10 days. Taking into account the time it takes to complete transactions, it will take 2 weeks to choose the most convenient moment. Accordingly, there may be 26 such operations per year. We multiply by 6% and we have 150% profit per year, excluding capitalization.
What conclusions can be drawn? Definitely, such operations are worth doing, but for this you need to have start-up capital available and devote enough time to thoroughly master all the skills of the process. These calculations do not take into account many factors, and they cannot take them into account, since the situation on the market changes very quickly and these calculations may become irrelevant at any time. But I was not going to provide a ready-made business plan with calculations and a guide to action. My goal was to show that there is still money here and their supply is quite large.
Successful arbitration!
Greetings to all blog readers! This time I will tell you about a relatively simple, fast and almost risk-free way to make money through crypto exchanges. This is earnings on the difference between the value of the same asset on different trading floors. Herself the scheme of the process is simple: we buy a crypt on one exchange (where the price is the lowest), we sell it on another (where the price is the highest), we return and repeat the process in a circle. It takes a little time, does not require deep knowledge of the crypto market and trading experience, the risk is minimal.
What's the catch, you ask, exactly what's in nothing! Without going into technical details, the difference in price for the same asset between crypto platforms is determined by the peculiarities of the crypto market. In particular: decentralization, slow transactions, high volatility, the lack of a single price glass, etc. For us, the main thing is that you can and should make money on this phenomenon. Cryptocurrency arbitrage is usually divided into classical and statistical. Let's take a closer look at an example.
Classic arbitrage 2018 (simple)
This is a kind of so-called spatial exchange, where transactions are carried out with the same financial instrument traded on different platforms. Our goal is to earn. The goal is to buy low in one place and sell high in another. Since the profit is obtained due to the inefficiency of the execution system itself and the aggregation of price quotes, the classic arbitrage method is considered to be practically risk-free. Of course there is a minimal risk, but more on that later.
First you need to monitor quotes on different trading platforms and find crypto pairs with the largest price difference between them. Then calculate the expected profit taking into account commissions. If the result of the calculation is positive, we make a double exchange. The full cycle looks like this:
- We start and replenish digital wallets in Internet payment systems (Yandex.Money, webmoney, payer, etc.)
- We buy the desired crypto-coin for fiat (rubles, dollars, euros) on the exchange with the lowest price
- We transfer it to another, where the rate is noticeably higher. We sell for fiat.
- Looking for the most profitable way convert fiat to crypto asset.
- Repeating the arbitration process
The classic cryptocurrency arbitrage in 2018 is still relevant under the following conditions:
- Your funds for arbitration are more than $100
- Commission for transactions and transfers between exchanges is less than the likely profit
- Arbitration during the period of inactive trading
- Quote difference currency pair over 2%
Arbitrage Exchange Example
At the time the post was published (05/19/2017 at 22.30), the cost of bitcoin against $ on Livecoin was 1812 USD, and on Exmo - 1830 USD. The difference is $18 (1%). The task of the arbitrator is to buy on livecoin and quickly sell on exmo. As a result - net profit about $15 (minus 2x0.2% per trade and transaction fee). Let's look at eth/usd, in livecoin the cost is $206, in exmo -200; difference 3% (206/200=1.03).
Static arbitrage earnings
Static cryptocurrency arbitrage involves an analysis of the current state of the crypto market, where the participant buys the most promising asset for growth. In contrast to the classical scheme of work, it involves the risk of making the wrong choice with subsequent financial loss. In fact, statistical arbitrage earnings have much in common with conventional trading strategies, based on the calculation of the probability of profit. The main task - identify patterns of price movement of different instruments (correlation) and use it in trading.
In practice, this is done as follows: first, we select several dependent instruments (trading portfolio). Then we can determine which of them is currently undervalued and which is overvalued, and make a sale or purchase of one or another instrument. The effectiveness of the statistical method is much lower, but the strategy itself seems to be more flexible than trying to equalize quotes on different exchanges. The solution often comes down to creating a neutral portfolio whose floating profit chart moves in some channel.
A typical example is pairwise arbitrage between Bitcoin and Litecoin. The correlation between Bitcoin and Litecoin is high. Currencies change places from time to time - litecoin goes up, bitcoin goes down and vice versa. We buy the overtaking currency and sell the leading one, and at the moments of their contact we close the deal. If we believe that the currencies will come to some parity, then this is a transaction without risk as such. The problem is that the dependence is not constant and such a scheme will not always work perfectly.
Free Cryptocurrency Arbitrage Robot
An equally interesting manual and automated bot is provided by Arbitraging. I started working with him on November 1 and published a review of the arbitrage bot.
Initially, a very limited range of opportunities to earn a living was available to mankind: gathering, hunting, primitive agriculture. But as society evolved, new tools became available. One of them is cryptocurrency arbitrage. At first glance, it may seem like a common form of speculation. But what can you learn if you study it in more detail?
general information
When cryptographic money appeared, exchanges began to develop, offering their services for buying, selling and exchanging them. Moreover, these operations can be carried out both between (for example, bitcoin for litecoin), and ordinary traditional ones, such as rubles, hryvnias, dollars, euros. These are more or less similar, but, nevertheless, the differences can reach several percent.
Earnings on cryptocurrency arbitrage involves buying at a low rate, and selling at a higher one. Profit is the size of the difference. By the way, it is called arbitration. To earn in this way, you do not need to have special knowledge or skills. It is enough just to constantly monitor the value of rates on the main exchanges.
What should you pay attention to?
Here is a short list:
- In fact, the course itself.
- The amount of commission for depositing or withdrawing fiat. Here we should step back and make a little clarification. Cryptocurrencies are usually entered without commission. There is a small fee for withdrawal. Therefore, in order to avoid negative consequences, you should follow the fiat.
- Know the list of codes exchange offices. We'll talk more about this.
Where to deploy activities?
On what platforms can you master the inter-exchange arbitrage of cryptocurrencies? It should be noted that there is a fairly wide potential field of work. But within the framework of the article, only the most popular ones will be given:
- BTC-E. This is perhaps the most popular Russian-language exchange. Its feature is, as a rule, a lower rate than on other trading floors.
- where there is a large volume of trading, there is a significant difference between the sell and buy rate, and orders are quickly filled. It is quite good for beginners to earn initial capital.
- YoBit. A wide range of cryptocurrencies, there are bonus distributions. It is considered the leader of the process of adding new positions.
- livecoin. Quite an extensive Russian-language exchange.
- btc-trade. Ukrainian project, works with hryvnias. It has good rates, it is much more profitable to work with it than through exchangers.
On these exchanges, you can monitor cryptocurrency rates in real time and when profitable option buy/sell them.
How to earn?
The most optimal way is to transfer funds between exchanges using special codes. The positive point is that no commission is charged for their use, and transactions are carried out instantly.
The advantage of the codes is that they can work with both cryptocurrencies and traditional ones. in cash. Also, keep in mind that they are disposable. Therefore, by activating the code, a person will say goodbye to the amount on one of his accounts. It should be noted that earnings in exchangers can have their own pitfalls, for example, work not in automatic, but in manual mode. Therefore, such a service for cryptocurrency arbitrage is undesirable to use.
Example
Let's look at a situation that could potentially take place. Let's say that on EXMO bitcoin costs 400 thousand rubles. And on BTC-E it is traded for 396,000. What is the procedure? Initially, you need to deposit funds in BTC-E and buy one bitcoin in this way. After that, it is transferred to EXMO with the help of a code. At the same time, a commission of 0.001 BTC is charged for moving, as well as 0.2% for buying and selling. All that remains after the sale is profit. In our case, it will be something about two thousand rubles. And then the most interesting thing begins - the cryptocurrency arbitrage itself.
First you need to find The best way return your money to BTC-E. After that, the process is repeated. It should be noted that advantageous offers At some point in time, it may not be. Therefore, it is necessary to track the rates of cryptocurrencies in real time in order to make money on them at the right time.
To fill in free time, you can trade currencies directly on the exchange itself. This is a classic arbitrage scheme. It is convenient thanks to long-term use and is the most popular principle of interaction.
A little more about the classic scheme
If there is no desire to start trading without investing your funds, then the initial capital can be obtained on sites that distribute it for free. To do this, just register, work a little, and it will be available in a couple of days. Direct profit is formed due to the inefficiency of the sales system and the aggregation of price quotations. We can confidently say that there are minimal risks in the classical scheme. But they are still there, you should not forget about it.
We should also mention the minimum requirements in order to successfully start here (you can, of course, lower the bar, but then the effect will be minimal). So this is:
- The amount of funds for arbitration is more than six thousand rubles.
- Commissions for transactions, as well as transfers between exchanges, cost less than the profit received.
- Work during an inactive trading period in order to earn before a significant price change.
- It is desirable that the traded pair differ by more than two percent. The example above, where it was only 1%, should not be considered as a practical guide to action.
Static arbitrage earnings
This method requires analyzing the current state of the market, where the participant acquires the most promising asset in terms of growth. Here there is a risk of making the wrong choice, which will lead to financial losses. In general, this approach has much in common with that based on the calculation of possible profits. The main task in this process is to identify patterns and use them to your advantage. How is such cryptocurrency arbitrage implemented in practice?
To begin with, you need to select several dependent instruments, forming your trading portfolio. Then you should determine where there is an underestimation, and where there is an overestimation. And we buy what suits us. The effectiveness of this approach is relatively lower than when working according to the classical scheme. But the strategy is more flexible. Often the solution in this case comes down to the formation of a neutral portfolio, the price chart of which moves without strong jumps. Let's look at a small example.
Suppose a bet was made on the statistical arbitrage of a pair - Litecoin and Bitcoin. There is a high correlation between them. At the same time, there is a pattern - one currency goes up, the other goes down. Then they change places. Our task is to buy the catch-up currency and sell the leading one. At the moment of their contact, we close the deal. If there is an assumption that currency parity will be established, then this can be implemented without significant risk. But, alas, there is a minus here - the dependence is unstable and will not always work.
Using automation tools
All of the above assumes that the actions are performed by a person. But does it have to be like this? No, help can come special program for arbitrage on the cryptocurrency exchange.
Moreover, automation tools are performed in a fairly wide range. This can be a bot for cryptocurrency arbitrage trading, and a program that will only report changes and / or reaching a certain level of quotes, and all decisions will be made by a person. The first option sounds the most attractive. But if automation could trade perfectly, it would calmly oust all human brokers and traders. There is a high chance of losing. Therefore, the most suitable option is a program with informing functions. And you have to rely on your mind.
If some prefer to invest big money in hardware to engage in mining, others manage to make money on arbitrage without investing a penny in this business. It's up to you to decide which opportunity to take advantage of.
Arbitration is low rate and selling on an exchange that offers crypto coins at a high rate. And so several times until the desired amount is reached. Each cryptocurrency exchange sets its own rate due to the fact that they are decentralized and not controlled by anyone. Sometimes this difference can reach up to 10%, or even higher. Therefore, the question of how to make money on the difference in rates of different is not worth it. To do this, you do not need any specialized knowledge or any investments. All that is required from a trader is to monitor the difference in rates and catch the moment when you can buy or sell assets. Let's try to figure out how to become successful in arbitration.
The principle of earning on arbitration
The principle of making money on Bitcoin arbitrage is very simple - use the difference in quotes of various digital coins to your advantage. The fact is that arbitrage cryptocurrencies have a fairly noticeable difference in price on different cryptocurrency exchanges. Therefore, the principle of making money on arbitrage is quite simple - buy cheaper and sell more expensive. Even a child can master it.
In principle, it is due to the simplicity of work that this way of earning has gained such wide popularity. In addition, this is facilitated by the fact that the price of cryptocurrencies is constantly changing. Even during the day, exchange rate fluctuations can be 20% or even more. And if you wait a couple of days, you can generally enrich yourself several times over.
To summarize, arbitrage allows you to get the maximum profit for a very short term. At the same time, you do not need to do complex mathematical calculations, as for a standard game on the stock exchange, or invest a lot of money, as in mining. Quotes on different exchanges constantly fluctuate, and since they do not do it at the same speed, you can make money on this phenomenon. Basically, it's just speculation.
Let's look at how to make money on cryptocurrency arbitrage:
You can repeat such operations countless times, but not all exchanges allow you to quickly withdraw money from your account. This can slow down earnings. In addition, knowing what cryptocurrency arbitrage is, a speculator must understand that the more coins he exchanges, the greater the instant profit will be. Arbitrating small amounts, you can’t get a big profit, but you can go at a loss.
Classic arbitrage
The classic cryptocurrency arbitrage is a type of spatial exchange. Operations are carried out on the same financial instruments, but only most arbitrage transactions are conducted on different . In any case, the goal of classical arbitrage is the same - to make a profit.
The user receives money due to the inefficiency of the execution system and the aggregation of price quotes. Thus, classical arbitrage becomes practically risk-free.
How to make money on cryptocurrency arbitrage, we will talk below.
But classical arbitrage will be effective only if:
An example of successful cryptocurrency arbitrage transactions can be seen in the following table:
| STEEM / BTC exchange | |||||
| Pair | Exchange | Buy | Sell | Last course | Volume 24 |
| steam_btc | bittrex | 0.00048091 | 0.00047591 | 0.00047599 | 983419.2 |
| steam_btc | poloniex | 0.00043743 | 0.00043735 | 0.00043735 | 255075.7 |
| 8.7968360652 | |||||
|
LTC / EUR exchange |
|||||
| ltc_eur | exmo | 133.999732 | 133.11 | 133.11 | 251126.6 |
| ltc_eur | wex | 123.763 | 122.853 | 123.763 | 586318.7 |
| 7.5523379362 | |||||
|
ETH / EUR exchange |
|||||
| eth_eur | exmo | 730.47999999 | 726 | 726 | 1397317.5 |
| eth_eur | wex | 675.41916 | 673 | 673 | 565766.3 |
| eth_eur | sex | 679.99 | 672.01 | 671.61 | 1105.4 |
| 7.4888073948 | |||||
Statistical Arbitrage
If everything is more or less clear with the classic version, then the statistical inter-exchange arbitrage of cryptocurrencies remains an unexplored industry. No wonder, after all this strategy arbitration differs markedly from its counterpart. The main task of a person who is engaged in this type of trading is to find a pattern observed in the price movements of various cryptocoins, and use this finding in trading.
To conduct statistical arbitrage on cryptocurrency exchanges, you need to do the following:
- First you need to choose the cryptocurrencies with which you will conduct transactions. Moreover, it is not necessary to immediately grab onto the top cryptocurrencies. Of course, Bitcoin transactions are profitable, but many experts believe that this market is too overheated.
- For analysis, you can use the correlation coefficient. It will help to find out which currency is overvalued and which is undervalued.
- Then make a purchase / sale of one or another currency and make a profit.
The most common example of such trading is pair trading, in which cryptocurrency arbitrage takes place on two exchanges with two instruments. True, in this case one cannot count on high efficiency, but the system looks flexible.
Something like a flexible strategy is being formed, within which you can work with virtually no risk and trade on the borders of what is permitted. The profit is floating, so you most likely will not see stability here. But statistical arbitrage between cryptocurrency exchanges is more often used by professionals, as it is noticeably more complicated than its classic counterpart. But if you believe the theory, then using this strategy, you can create a stable artificial instrument by using dynamic weights to calculate the size of positions that are opened.
But there is a problem in the formation of this tool, and it consists in the search for relatively stable inefficiencies. The cryptocurrency market is too volatile and unstable, which means that the dependencies are the same. And if an unstable dependence is used for the graph, it simply will not correspond to reality. The chart that has gone to the side is ineffective, and the package collected by the trader will lose its neutrality with respect to the market.
To engage in arbitration, you need to select a list and exchangers that are suitable for this activity. To do this, you need to pay attention to several factors. First of all, on the rate of cryptocoins, because it is on it that we will earn. Then be sure to pay attention to the commission that the online exchange takes for working on it. Most sites do not require a commission when they deposit money, but you will have to pay for the withdrawal. And the commission in exchangers is even higher.
let's consider best exchanges cryptocurrencies for arbitration:
But exchanges are not the only place for cryptocurrency arbitrage, because there are also exchangers:
conclusions
Earnings on cryptocurrency arbitrage in 2018 can amount to really large amounts if you skillfully approach the implementation of speculation. The cryptocurrency market is developing, therefore it is still possible to engage in arbitrage trading on it. And in developed markets, such speculation is no longer effective.
Even beginners will be able to engage in such activities, since even primitive strategies can be used. In addition, it eliminates the need for additional costs. This is a promising direction for traders. The minimum risks and profit per trade of $7 (with $100 asset) is far from the limit. In a day, the invested funds will pay for themselves, especially since, in fact, you do not lose anything. But there are risks, albeit minimal ones. Therefore, it is advisable to undergo training before starting to fully work with digital money.
While someone is trying to mine bitcoin and other cryptocurrencies, there are people who have been successfully earning in this area for a long time without investing a penny in hardware. They get their profit from arbitrage on the cryptocurrency exchange, which can be used by anyone who reads to the end of this article. To generate income, the difference in rates between individual trading platforms is used, which arises due to the lack of centralization in the work of individual exchanges.
Arbitrage earning scheme
First, let's explain where the earnings come from. Since the cost of cryptocurrencies is constantly changing, their quotes constantly fluctuate, but on different exchanges they do it at different speeds, as a result of which the cost of the same bitcoin can vary greatly there. The task of a trader using arbitrage on a cryptocurrency exchange will be:
- buy bitcoin where it is cheaper;
- transfer to the exchange, where it is already more expensive;
- exchange for dollars or other currency;
- bring it to your wallet or to the trading platform, where it was originally bought at a low price.
As soon as the money is returned back, the process can be repeated, starting a new cycle.
Strengths and weaknesses of the arbitration system
The advantages of arbitrage compared to any other strategy for cryptocurrencies are obvious:
- the speculator does not require special knowledge about the world of finance or cryptocurrencies;
- do not have to spend a lot of time on analysis;
- no experience required;
- low risk.
It is easy to see that the risk is still present. Unfortunately, it is impossible to completely eliminate it. The main danger is that at the moment when the trader transfers funds to another exchange, where he was going to sell them and earn money, the rate will fall sharply, destroying the difference in price and making it impossible to earn money or even forcing you to incur losses.
To minimize possible risks, it is desirable to trade during periods when the market will be calm. Then the arbitration between cryptocurrency exchanges is stable and brings a guaranteed income. In order not to get confused, you should know that arbitrage strategies are divided into two main varieties.
Variety one - traditional
The most common type, which has already become a classic, is to trade one asset on various exchanges. In fact, this is a common speculation - bought cheaper in one place and sold more expensive in another. The trader’s income comes from the lack of an effective technical base against the backdrop of delays in processing orders, the speed of updating the order book, the receipt of new data, etc. Because of this, the use of a classic arbitrage strategy on a cryptocurrency exchange is considered a practically risk-free approach.
The essence of the strategy is to track quotes on different trading platforms and look for identical cryptocurrencies with a significant difference in their value. After that, it is important to calculate the likely amount of income, taking into account the conversion and commissions. Having received a positive result, create a cycle and proceed further. The algorithm of actions is as follows:
- Register wallets in popular electronic payment systems.
- They study the offers of various exchanges, looking for a difference in price.
- As soon as the conditions for arbitrage are found, they deposit money on the exchange and buy cryptocurrency.
- After that, the acquired funds are transferred to another trading platform, where the rate is higher.
- They sell cryptocurrency and withdraw fiat money to a wallet or exchanger.
- Repeat the process again.
Conditions for successful arbitration
Considering the specifics of the market in 2017, the successful application of arbitrage strategies requires:
- allocate at least 100 USD;
- select exchanges with minimum commissions And convenient ways conclusion;
- work during calm periods when market volatility is low, otherwise the risks of not seeing the right price after the transfer of funds increase;
- use arbitrage on the cryptocurrency exchange, provided that the price gap between quotes on trading floors is 2 percent.
Consideration of the situation on a specific example
To better understand how to apply the strategy under consideration, you need to consider a simple example.
So, in May 2017, the price of BTC on LiveCoin was 1811 USD. On another popular site - EXMO - it was equal to 1829 USD. The total difference between quotes is 18 USD. This is about 1%, that is, even less than the recommended parameter of 2%.
Nevertheless, the gap in dollars is not bad, so you can try to make money by buying BTC on LiveCoin and immediately selling it on EXMO. If you take into account transaction fees and a commission of 0.2% for buying and selling, then the net income will be 15 USD.
You can also look at the same two exchanges for the cost of ether (ETHUSD). It costs 207 USD on LiveCoin and a little less than 201 USD on EXMO. That is, the difference in percentage is about 3 percent, which creates ideal conditions for arbitrage on the cryptocurrency exchange.
The second type is statistical
The second type is based on the fact that the cost of cryptocurrencies on individual exchanges correlates with each other, and therefore an increase in prices on one site will inevitably lead to an increase in the cost on another. This type of arbitrage is familiar to many Forex traders, since at one time such a strategy brought good earnings. The task of the currency speculator was to find an up-to-date data stream, and to trade at a broker where there is a delay in the receipt of information, which caused a belated price reaction and allowed entering the market knowing exactly where the price would go in the next moment.
In the case of arbitration between cryptocurrency exchanges, the principle of action is the same, but it appears the new kind risk, since the trader has no guarantees that a price surge on one site will lead to an increase in the asset on others. But still, in most cases, such a strategy based on correlation (relationship) works.
You can apply this approach with one cryptocurrency between separate sites, as well as with several assets within the same exchange.
A striking example is BTC and LTC. There is a direct relationship between these two tools, and it has quite a lot of power. Therefore, if you put BTC and LTC quotes on the chart, you can look for entry points at the moment when a noticeable gap forms between prices.
The algorithm of actions is usually to wait for a divergence in price, and then buy a cryptocurrency that has dropped a lot. If BTC has fallen noticeably against LTC going up, then they buy bitcoin and vice versa.
Automating the search for potential entry points
Recently, many attempts have been made to create a program for arbitrage on the cryptocurrency exchange according to the first variety. On this moment there are already several more or less successful attempts, but they are distributed on a paid basis and in most cases do not justify their cost.
Therefore, decide whether to buy or not such software products, everyone will have to independently. But, it is possible that some new interesting application will soon appear that will automate calculations by receiving a data stream from various trading platforms.
Results of consideration of the arbitration strategy
Arbitrage on the cryptocurrency exchange is a great way to make money, but you still need to remember that there are always risks. For example, back in the early summer of 2017, the BTC-E platform was often used to apply the strategy, but at one point, its accounts were arrested, and customers were left without money. Therefore, you always need to be mentally prepared for losses so that their sudden appearance does not lead to critical consequences, and already being in this position, gradually and carefully make money on cryptocurrencies online.
