Bitcoin Forum

So let's say I've found two different exchanges where prices of selected cryptocurrencies is varying quite a bit.
How to arbitrage?

Should I buy some BTC at let's say 3.700 then send this amount to second exchange where I will sell it for 3.900? The profit here is that I have more fiat and I can't really multiply this process (or maybe I can send earned money to the first exchange again, but it takes a lot of time).

Am I seeing this right?

well i would not do it with btc, cause the price already changed before your coins swapped wallets. try a faster coin for that

Multiple people have tried this already, and almost as many of them failed.

You need to take a few things in concideration:

1. The prices might go up/down between the moment you buy and sell.
2. The transaction fees are (for small transactions) huge. This is solvable to exchange for e.g. doge (which has lower fees).
3. When one exchanges has a constant higher rate, you'll need to deposit and withdraw fiat as well. This can cause problems with your bank.

All in all a lot of things to think about.

If you think you can make a profit; go for it!

Hello,

Bouncing on Joseph's answer I have a few interrogations:

When you say the price might move between the moment we buy on one exchange and sell on the other you mean between the time we click on the button ?

I am not sure I get it right. If I buy a btc at 4000usd, even if the transaction takes a few hours to get verified and the btc to appear in my wallet, I will still have paid 4kusd for a bitcoin right ?

And if I short (of the exchange allows it) a btc on the other exchange for 4200usd, all i need is to transfer the btc from one wallet to the other and that should do it right ?

(All fees set aside)

Where do I get it wrong ?

You should have an equal balance between two exchanges like you have 1 BTC in first exchange and 1 btc in second exchange and equal amount of fiat as well in two exchanges. If ever you see that one exchange has the lowest ask price amounting to $3,700, you buy it at that amount and then you see in another exchange it has the highest bid price amounting to $3,900 so you sold your bitcoin to that amount. You can do it immediately since you already have the balance of both fiat and bitcoin in two exchanges.

After the orders are filled, you can then send the bitcoin to one exchange and the fiat to the other so that it will be balance again and you already have a gain of $200 without transaction fees. You should not arbitrage like buying one currency then send it to other exchange to sell because it would take time and price might already change before its received and worse you will lose because of it.

When buying BTC with fiat, you get the amount in BTC right away. The only thing that takes time is sending BTC from one exchange wallet to another (for example from poloniex to bittrex, which are 2 well known bitcoin exchange websites).

The problem is that even though for example you send BTC valued at $4000 from exchange site #1 hoping to sell it at exchange site #2 at 4200, by the time it reaches exchange site #2, the value at exchange site #2 may already have corrected its price down to $4000 as well. When this happens, you only loose money on the transaction fee spent for sending between the exchanges.

It is also very unlikely that you will find a $200 difference between exchange, especially for bitcoin. You may be better of trading altcoins. But even that is more volatile.

The problem is with the confirmation time with the transaction right?

This is how to do arbitrage. If you're going to use this as a full-time trading strategy there is no need to constantly move funds from one exchange to another. After every trade one account will show a profit and the other a loss but the sum of the two should always be positive. As it will vary which account takes the loss you will only occasionally need to move funds to equal out your balances.

The thing is time to transfer is not in your control.. Also, many Bitcoin websites doesn't let you withdraw in real time....

I liked this answer the best:

You should have an equal balance between two exchanges like you have 1 BTC in first exchange and 1 btc in second exchange and equal amount of fiat as well in two exchanges. If ever you see that one exchange has the lowest ask price amounting to $3,700, you buy it at that amount and then you see in another exchange it has the highest bid price amounting to $3,900 so you sold your bitcoin to that amount. You can do it immediately since you already have the balance of both fiat and bitcoin in two exchanges.

After the orders are filled, you can then send the bitcoin to one exchange and the fiat to the other so that it will be balance again and you already have a gain of $200 without transaction fees. You should not arbitrage like buying one currency then send it to other exchange to sell because it would take time and price might already change before its received and worse you will lose because of it.

This is the real basis for an arbitrage which taking advantage of a situation where you can find two situations having different figures so you can buy in one and sell in another one and possibly makes some profits. However, this is not anymore new but if you think you can make some profits doing it then I guess you should try it.

You got the idea right. However, this is very hard to do successfully. And it is much more complicated especially when it's an other country's exchange. The success rate of executing it decreases over time. Considering, blockchain confirmation time/s and the exchange's confirmation requirement. I only have the urgency of doing it if the price difference is at least $90. Below that, I let it go.

In theory yes you could do this. In practice, it takes so long for bitcoin to confirm that the price might have moved in the meantime. In addition, fiat also takes a while to move (about 3 days and they don't move money over weekends).

However, you should be able to do arbitrage with a coin that confirms in a few minutes.

If there's a huge disparity between exchanges it's either closed rapidly, as in seconds or minutes, by people who can arbitrage, or there's some type of problem that means it's impossible to successfully arbitrage.

That could mean a wallet closure, volume so low that any significant buys or sells would distort the price even more, restriction to a certain country or other stuff.

Everyone likes free money. No one leaves it on the table. If it's staying on the table then there's a clear reason for it.

You can use Gdax exchange, and take arbitrage from the Usd-Euro with buying and sell BTC , ETH , LTC. I have not try it but I supposed it must be done. The only problem is you must have deposits both Euros and dollars.

It is very important in arbitration to take into account the commissions that the exchange establishes for the input and withdrawal of funds. If you do not take this into account, you may lose your capital. You have to calculate everything

I think that risky transaction is very low spread gap price loss in transaction fee while buying and selling another losses for the transfer btc. this is a usdt or usd price hard to transfer the fiat money compare to btc. if you do that your capital should be big and you really need to watch it then double check the volume.

You def. have the right idea, although a lot of the details are often overlooked in profiting from arbitrage. That's why I believe in this ICO bc they are aiming to make crypto easier to enter for all with their novice friendly UI and the first ever arbitrage exchange that will allow for less market volatility which keeps so many inexperienced and afraid people on the sidelines. Arbitrage with a trustworthy company will provide a greater opportunity to profit in this economy.

https://bitcointalk.org/index.php?topic=3085831.msg31823480#msg31823480

Is this even possible on US exchanges?