Bitcoin Forum

Hey everyone,

I've recently written an article about how arbitrage trading works and how to do it successfully with crypto. I'd love to hear your thoughts!

Article link: https://medium.com/coygo-blog/how-to-profit-from-crypto-arbitrage-trading-31b714842fb8

Disclaimer: In the post I mention how a product that I built (Coygo) can help w/finding arbitrage spreads

yep, arbitrage is to transfer 1 asset / coin from the same exchanger. eTH coins from bittrex to binance. how to take profit? of course, with a significant price difference. but for me personally, not all coins can be done. My main choice is the speed of transaction delivery. even though an open deposit and withdrawal coin has a difference in price. but slow in the shipping process. I will not arbitrage. that's a big risk. experience a few weeks ago I arbitrage AEON from hitBTC to bittrex, the price difference is more than 5% but the transaction confirmation process is very slow that is more than 12 hours. so I did not continue. so before arbitrage please pay attention to this:
- deposit information
- withdrawal information
- transaction speed
- transaction fee
- open bid (sell and buy)
- alternative coins to return to the previous exchange.

In the article I go over two approaches. One is to purchase a coin, transfer it to another exchange, then sell it. This is slow and risky since you can't guarantee the spread will still exist after the transfer. The other solution I describe is to hold balances on both exchanges and just submit accompanying buys/sells. This avoids the transfer time and cost issue, but obviously requires you to hold balances of both already.

When trying to sign up to Coygo, I get error 403. My country is not USA. I would love to try it and I am willing to provide some feedback to you.
Edit: nevermind, I received email and activated account, downloaded app and tried to install it. Immediately I got this warning:

Is your app safe??

Yes that is an unfortunate thing that happens because we're still new and not enough ppl have downloaded the app yet so Windows doesn't recognize it because it hasn't been installed on a ton of machines. All of our builds are signed w/valid Windows certificates. I've been working in fintech for years (previously worked at Intuit on the TurboTax product and surrounding infrastructure), and I left that job to pursue Coygo full-time. I know there isn't really much I can do to make you trust me but we're a US-based company, registered in Delaware operating out of California, and this is my LinkedIn if you'd like to do your homework on me https://www.linkedin.com/in/evan-francis/.

in the second option, if you have funds for both exchanges. to cut transaction time, I don't think you can. how do you conduct arbitrage, while you do not transfer to another exchange that has a higher price. if you don't make a coin transfer, I don't think you arbitrage. You only trade at prices that have not yet risen from other markets through your balance on two exchanges. example: BAT / BTC in market A is 100sat, while in market B it goes up to 125sat. but you have balances on both markets. and you buy at market A instantly and wait for it to pump like market B. well, basically it's the same as arbitrage. but it is not arbitrage.

This requires speed in transactions, if it is slow then the work will be in vain. By the way, after 2 years this product was made, you just launched it now? How many people have used your product?

I clicked Run anyway and then Avast antivirus started analysing the program. No problems found but then this showed up:

https://i.imgur.com/4M66EYh.png

Looks like someone will manually check the file because it is still going on after few hours. I will patiently wait. Maybe this check will also help so that next time Avast will approve the file because it will be whitelisted.

I suggest to install third party software, without source code to compile, in a virtual machine with the appropriate isolation from host OS.
Be careful installing apps in the same machine when you hold all your wallets!
But I'm sure al of you, already knows it.

That is the first time I've seen that, but as I mentioned we're still new and have a small number of users so it's actually possible you may be the first user to run it who has Avast on their machine. Thank you for the heads up.

We've been in a closed invite-only beta, by the end of the two years we had about 100 people signed up. We didn't do any marketing in the closed beta and weren't focusing on finding customers, we've been focused more on getting feedback from the people who were using it. In typical startup fashion we also pivoted a number of times, the product we have today doesn't at all resemble what we started with, and we actually changed companies in the process (needed to restructure as a C-Corp and we ran into a trademark issue with our previous name).

After our first week of being in open beta we're at 150 users registered, and daily active users ranging anywhere between 30-80. Those numbers will be increasing over the next couple of months as we focus more on marketing and keep the product free (for now) as feedback is more valuable to us than revenue atm.

Alright I will go over a scenario here that explains how arbitrage works without transferring between exchanges. To make it simple let's assume a pretty large spread, so it makes it easier to reason about and see the impact.

-----------------
Starting state
Exchange A:
  BTC-USDC rate: 7,050
  balances:
     50,000 USDC
Exchange B:
   BTC-USDC rate: 8,000
   balances:
      5 BTC
Total portfolio:
   50,000 USDC
   5 BTC
------------------
Placing trades
Exchange A:
  buy 4 BTC with 28,200 USDC (7,050 * 4)
  balances:
    4 BTC
    21,800 USDC (50,000 starting - 28,200 traded)
Exchange B:
  sell 4 BTC for 32,000 USDC (8,000 * 4)
  balances:
    1 BTC (5 starting - 4 traded)
    32,000 USDC
Total portfolio:
   53,800 USDC (21,800 + 32,000)
   5 BTC
------------------
Ending state
Total portfolio:
   53,800 USDC (21,800 on Exchange A+ 32,000 on Exchange B)
   5 BTC (4 on Exchange A + 1 on Exchange B)

You started with 50,000 USDC and 5 BTC. You now have 53,800 USDC and 5 BTC. You've accumulated more USDC without losing any BTC by exploiting the arbitrage spread of BTC-USDC 7,050 on Exchange A and 8,000 on Exchange B.

Its very difficult to make any money from crypto arbitrage these days. Its mostly done by high tech bots using API. I actually was able to do arbitage back in 2015-2016 succesfuly and basically even had success by sending back and forth between exchanges.

From what I recall there was only a handful of exchanges, I remember that Poloniex, Mintpal, and Crypsty were among the biggest back in the day. I would basically scan the quotes and if there was a >2% spread, I would buy the alt on one exchange with BTC, and immediately do a withdraw and usually it would arrive in less than 5 mins at the other exchange and confirm. Volumes were smaller back then and it was possible. However sometimes I just held the alts on various exchanges and did an instantaneous arbitrage however the danger in holding the alts was that they lost value quickly.  These days you can't do that anymore.

The problem I have with arbitrage strategy is that possibility of spotting an opportunity on major exchanges are low since their spreads are way faster. A friend of mine who has been obsessed with profitting off arbitration recently lost 5 ETH. How? He saw an exchange that offered Ethereum and BTC at a slightly higher price. I mean, The exchange had everything - more exchange look and feel, 2FA - everything and banking $10 on every ETH seemed like a good deal.

Another issue with arbitrage is the tx fees that goes along with it.

Yes, arbitraging is too risky, yes trading is already risky but arbitrage is more. Sometimes there will be delays in transferring your assets or your coins to the other exchange due to the congestion , sometimes it is not yet confirmed in the other exchange the price of the coin already dumps, the prices of each coin is not differs too much, it is a little differences in each exchanges. Fees are also one of the problem, you need to pay that and it will deduct to your coin.

It was much easier to profit from arbitrage back in 2016 than it is today. There are multiple sites which offer bots to do it and also some sites which tools (Newscrypto arbitrage tool).
Exchange liquidity is a factor which isn't covered enough in this article and is very important.

Well, transaction fees are another factor when doing arbitrage, you have to trade huge volumes in order to have a good profit. Sometimes higher price value is deceiving, and be aware to trade only on known exchanges. Another factor to consider is the time to receive your token to another site because sometimes trading is suspended to that site, the volume is low, and delay in transferring coins.

I suggest you see my post above describing an example of how to preform arbitrage trading without transferring between exchanges. This is really the only way I would recommend most ppl to do it. It avoids transaction times and fees and makes it much easier to get a quick guaranteed profit.

do that on CEX exchange, is totally hard on nowdays.
buy some token on DEX exchange and sell them on CEX , its a trend for now .
well, probably u need wait for 2-3 days to get your target. but the profit is more better , rather than high speed transaction between CEX to CEX .
or the better ,
if u find some tokens moved their smart contract to another platfrom is a good target.
for example , about PGL token .
they move their smartcontract from ETH to EOS blockchain, and the good news , just a few people knowing it.
buy the old PGL from exchange , then swap it to new PGL and sell it quickly on EOS DEX.
on that time i got whales profit  ;D ;D ;D ;D

On the topic of using a DEX, if you haven't taken a look yet Totle makes getting the best price on DEXs easy. They have a smart order router that can split your order up into orders across multiple DEXs to ensure you get the best price, this helps solve the issue of low liquidity on single DEXs. I've met with their team a few times, they're good ppl and they have a solid product. They have an API, or if you wanna use it as a consumer they have an app that exposes the API here https://swap.totle.com/

I haven't explored using DEXs for arbitrage yet but it's an interesting idea.

All good. Tried opening the file again today, Avast made a quick scan again and approved the software.
https://i.imgur.com/9ahHHd6.png

I won't be connecting my exchange accounts yet, but I will definitely try the Arbitrage Scanner table thing and try some trades manually.

Yeah this is true, but it's definitely still possible today, especially if you look away from just the BTC-ETH and BTC-USD pairs since those are mainly the only pairs that big hedge funds and institutions are working with. Other pairs are left to the retailers.

I agree liquidity is an issue and I may go back and add a note to that article, thanks for the idea. Btw the tool I mention in the article, Coygo, does provide a feature called Pre-Order Calcs which lets you enter how much you want to theoretically buy/sell, and it will calculate your theoretical true cost by looking through the order book and finding each open order that you would fill to determine the actual rate you would be getting, instead of just the last rate.

no but thank you , somehow , i am not really trust about third party program.
u know like try to learn how the program works, or try to understand , its just make me bored.
i am not saying ur program has bad , but , i just dont like that.

I also completely agree with you that today a particular problem is displayed in the liquidity of most cryptocurrencies in the entire cryptocurrency market.  But nevertheless, if we are considering the possibility of trading with rating cryptocurrencies, then if we take the current time and look at what is happening on the cryptocurrency market, at an active drop in prices even for Bitcoin and Ethereum, then any trade is too dangerous.  I would rather work in a more stable environment.

Check out my article comparing Arbitrage and Trading bots (https://tradingbot.info/bot-101/crypto-bot-trading-vs-arbitrage/).
Arbitrage is hard nowadays and you need to have a lot of money to do it with profit.
If you are looking for a way to get profit doing less than a typical day-trader, then use automated bot platforms.

I think this is quite difficult when the prices between exchanges only fluctuate low for coins tops and new shitcoins have large fluctuations. but for shitcoins, there is no large volume to buy and when withdrawing, it costs more than what we imagine. So this is not a viable strategy. Better yet, we should trade the top coins and buy them at the right time to sell higher prices in the future.

The idea of arbitrage is not new. There are a lot of aspects that you could arbitrage. The concept with those different places in which could arbitrage is just the same. Let’s put it in simple terms, and it’s just taking advantage of buying at a lower price of the same product and selling it at a higher price.

So let’s say you could do that in trading the problem is that you cannot do it so fast. Once you have seen or computed that you could profit from it, it’s already been finished, or the opportunity is gone.

The easiest way that you could profit is to utilize a bot, just like Gunbot with Bitrage (https://gunbot.ph). It’s going to be automated and could help you profit from it. With different modes, you could easily make risk free trading with arbitrage. If anyone wants to know more about Bitrage, you could PM me.

I like that articles but the fact is not same. Big fund, speed transactions and also back plan if the main plan fail, you need think all of that. I already try this strategy but mostly fail in time. I suggest you play in one exchanges if you have big money I believe you can become whales.

Hmm... very interesting piece of information. I liked the article you wrote. Well-structured, easy to read, comprehensible and informative. Thanks for sharing!

Inter-exchange crypto arbitrage trading
You can simply buy cryptos at lower prices on an exchange and sell at higher prices on another exchange. The difference between the buy and the sell amount is your profit.

Example: You buy one bitcoin for 34,000 USD on Kraken and sell it for 36,000 USD on Binance. Your profit will be somewhere between 1,900 - 1950 US dollars (after deducting transfer/withdrawal costs).

Intra-exchange crypto arbitrage trading (triangular arbitrage)
This method is a bit complex one. It needs your complete attention, careful consideration, and excellent calculation skills.

Example:
1st trade order - BTC/XMR @ 0.02235274
2nd trade order - XMR/BLK @ 0.00227243
3rd trade order - BTC/BLK @ 0.00005134

Your profit percentage will be 0.8219% (approx.)

I agree with you that the article is excellent, but at the time of arbitration I believe that the speed of the human hand comes into play, not so much the human hand but the speed of the brain, I think that to do arbitration you should take advantage of every second that It exists in the necessary time interval for the operation, however, in this case if I am in favor of using artificial intelligence bots, because it is the only way that I can have all the action in each of the exchanges.

In this case, High Frequency Trading also comes into play, which is responsible for causing many markets to collapse and at the same time making traders or investors lose. In fact, there is very little information about high frequency trading, because those who apply it are those who have that gold information, I have tried to find books of this style but it is really difficult.

Arbitrage is the trading strategy which use the lack of spread between one exchanger to another exchanger, if ypu goes to Sovryn platform you usualy see the comment like this " you can get 0.5 btc by selling 200 btc in this platform immadietly because the market price in this platform is higher then other platform".

And for doing it faster, you need fund in 3 different platform at least. The arbitrage trading will be more optimized when we are in the bullish market which give us more then 5% in one hour candle stick.

Arbitrage is indeed tempting, we can even get a lot of profit in a short time. However, the opposite can also make us lose a lot in a short time. High profits, high risks.

Of course, that's right, in arbitrage, it is necessary to pay attention to at least things like:
- Speed of deposit and also the withdrawal process from one exchange to another. This is decisive because each exchange has a different speed. And if the time is not right, then we will actually lose because the price has increased.
- Transaction fees to be incurred
- The price difference between the origin exchange to the destination exchange.

Agreed on all factors you listed above. As an additional input, Orderbook volume is an important thing to be consider since most coin that has a huge price difference on multiple exchange has different volume. If you manage to buy coin at low price on a certain exchange but the exchange offers high price has fake orders on there book, You can suffer huge loss once market move while you can't market sell your holdings.

For me the issue of abitrage is not about finding abitrage opportunity, it rather about been able to convert such opportunity to profit which in my experience has been nearly impossible! Most centralized exchange are buggy and connection could be slow sometimes and there are safety concern as regard your funds! There is also issue of capital and volume! There is just too much risk involve with arbitraging in cryptocurrency market!

Arbitrage trading was interesting in 2015 because there were already quite a lot of small exchanges and the spread could actually be very large, even with big coins like Bitcoin. Today, arbitrage trading is almost impossible for the top 100 coins, there are simply too many bots that would immediately exploit the spread.

From time to time, however, you can find very good arbitrage opportunities with low-cap coins, where a single trade can result in a profit of 10% or more. But this nowadays happens as often as Christmas, unfortunately.

Has anyone already had experience with bot? Is it worth paying for it? I would like to try it too, but the free version is limited in functionality, right?

I have no idea in bot trading in normal trading or in arbitrage trading. But found some info about arbitrage trading info in this forum.

   
He shared a result of using Zignaly platform -Re: Bot for trading - arbitrage (https://bitcointalk.org/index.php?topic=5122454.msg50344536#msg50344536)

Here the man share some good arbitrage bot names - Re: Is there an functioning Arbitrage bot? (https://bitcointalk.org/index.php?topic=5162220.msg51738733#msg51738733)

The info from atleast a year ago. so try to check first they are still available or not. Best of Luck

Quite an old topic this.

There are various bots made for the same purpose although I have only heard about them and never personally used them. The bots will analyze which pairs are trading at what price in different exchanges and based on the difference will execute trades in two different exchanges given you have balance, of course.

Not sure but such arbitrage opportunities are not very common because the market for crypto is really liquid and even if you find a small difference between pairs, you might end up paying all the profit in withdrawals and transaction fees.

Have you personally made any profit with this so far? Moreover, I don't really think a decent profit can be made if you buy from one exchange and then transfer the money and sell it on the other exchange. I think either the withdrawal fees will eat up your profit or the transaction time would autocorrect the price at parity. A better approach and how most people do it is using futures. You buy in a spot where the price is lower. Sell in Futures where the price is higher, then transfer the spot coins to the other exchange and square off both the positions. This way you can at least beat the transaction time. But Hefty withdrawal fees are profit killers unless you have 1 Million to Arbitrage with.

Arbitrage trading in my opinion is difficult to do, I myself have done arbitrage in several pairs,
one of which I arbitrage Ethereum from Bittrex to Binance, and it was one of my arbitrages that was really disappointing,
because suddenly GAS increased causing pending transactions to occur , yes! this is what happened to me

You need to have decent capital in order to make a good profit in arbitrage trading, yes, it's difficult but it's possible to succeed here. Arbitrage trading has not risked but there's no such thing as free so it's expected that's really hard to do this. I've also done this in the past, dong some trading in small and big exchange and it really takes time.

You write on arbitrage trading; that's fine but I just want to hear about your real time experiences on arbitrage trading. Do you have any? If so, why not you please find some time to share those? Because in my experiences, arbitrage trading is possible only theoretical and when it comes about trading in real time, we cannot find any significant profits through finding gaps in price ranges across exchanges.

Recently I tried to arbitrage within exchange by involving 3 pairs of coins but again I failed to make any significant profits in the end. So, it would be really helpful if you share any of your real time arbitrage experiences here on this forum.

I never try arbitrage trading, its complicated for me and high risk because in crypto exchanges the network of the some tokens can be more than 2, the risk can be wrong chooce of network . And currently, I dont see any different price of mayor and high cap coin from different exchange. The price of coin can be different between others crypto exchanges maybe because of low trading volume or high spread. I dont heard yet, any trader can make good profit from arbitrage yet.

The most difficult part is the time it takes for one person to analyze the current order books of one exchange buyer and another exchange, and then make two simultaneous transactions before these books change.
Arbitrage risk is too large, it is much greater than the risk of trading, sometimes due to congestion and delays in transferring your assets or your coins to other exchanges.

It's the reason why bots like Gunbot (https://gunbot.ph) are being developed to make sure that Arbitrage trading is profitable and easier compared to doing it manually. Besides, in this crypto market, you can never follow the movement on different markets simultaneously unlike bots.

I don't think you understand arbitraging if you think that the risk is large. There are different ways that it can be done whether it's intraexchange or interexchange.

Is this an app? How does it work? It must be expensive too. maybe for a small trader like me it will be difficult to have it.
 
As long as I was a trader I worked manually. I have to choose a con that has fast transactions and low fees. Several times, my experience has not been entirely successful regarding the arbit process, but at least the tips are coins that have fast transactions, low fees. Because the price difference usually does not last long.

This is installed in your personal computer or on a VPS. It's quite expensive since it's a one-time payment for every license. So of course, it would last you a lifetime. It's not that hard to get if you visit the site I included in my previous post.

It's pretty much impossible to arbitrage manually especially in crypto where market moves so fast since a lot of traders utilizes bots.

It's a trading app and the link shared by him is local, I believe while you can google gunbot and use the .com domain for the best price unless there are brokers offering it for cheap, I am not aware of it.

I have heard about gunbot from a lot of traders and the overall sentiment is positive towards the bot so may be worth a try but as you said, you are a small scale trader so maybe you should do it manually or even if you buy the gunbot, then go with the starter pack that is available at ~0.005 BTC and good for beginners.

Manual trading is good but you cannot compare prices from 10+ exchanges of your own so there is need for a bit at times.

Does the website on the link that the OP gave still work? I'm looking for somethings like this for a while i didn't know that this post exist last 2019, I'm curious if we could arbitrage trade without using the help of some app or service? probably manual trading or that wouldn't work?

Do not forget that the time for the transaction can be slow when the price increases or decreases to get a delay for our transaction. I have that experience before that made me stop using arbitrage trading because after I receive the coin in the destination wallet, the price is down deeper and I can not sell and take profit. If you can profit from arbitrage trading, you are lucky because that is not easy for novice or ordinary people who do not have much experience in trading.

There are lots of problems with arbitrage trading actually.

The withdrawal & deposit fees may take away all the profits you would have with the trade because arbitrage trading doesn't give you a massive amount of profit.

The platforms you are using for arbitrage trading may have some problems and hence the price is low. I mean some small exchanges often stop withdrawals for a particular coin which may be the reason behind the discrepancy in the prices.

There are lots of other problems which we cannot realize unless we do it ourselves.

You would really really be minding about this stuff because you would really calculate neither if  its worth to arbitrage or not because if you arent minding about these simple things then it would surely cost you

or would  simply end up on having no profit at all or simple tells that its nonsense to do such thing and to mind of that arbitrage opportunities are rare knowing that each exchange would really be that aware

on fast pace manner and would lock out deposits and withdrawals on a certain coin which do have big gaps compared to other platforms.So its really on a matter of small success on doing this.

Here some guide about arbitrage trading: https://zipmex.com/learn/arbitrage-cryptocurrency/
It has been mentioned about its cons which are the following:

KYC Restrictions
Storing Coins
Fees
Large Trades Provide Better Profit
Withdrawal Limits
Timing
Slower Transactions
Competition

You would really need to be fast on this.

Currently, if I see that the price for one and the same coin is different on different exchanges, I try to find the reason for this difference. And the reason for this difference is usually that the withdrawal and input of coins is suspended on one of the exchanges, which does not allow bots to equalize the price to the average.

That’s what a bot I was using had in trouble. It was as quick as it could be technologically but since the arbitrage trading happened insanely quickly that we ended up not being fast enough to make the trade and usually ended up with bags of coins instead of actually making a trade. It’s not easy to be as fast as that if you are handling it between two very common stuff, like let’s say a coin is listed on bittrex and also binance, making an arbitrage there is way too hard because it’s incredibly fast.

However, the good part is if you are doing from nation to nation, then you could potentially make a profit, I can tell you that I made a lot of profit from my own currency then to bitcoin then to dollar then to my currency, that type of arbitrage was a lot easier because it was basically international trade instead of just crypto arbitrage and rates mattered there.

Traders have engaged in arbitrage long before the emergence of the crypto market. At its most basic, arbitrage means that a trader capitalizes on the non-uniformity of the price of an asset across multiple markets. In essence, if the price of asset x is different on two different exchanges. A trader can buy the asset on one exchange at a cheaper rate and sell it on the other platform at a slightly higher price.
Whilst the occurrence of market inefficiencies is far more infrequent in traditional financial markets, the opposite seems to be the case in the crypto market. This is due to the way in which the cryptocurrency exchange sector functions. These platforms tend to run siloed systems, resulting in uncorrelated pricing. Therefore, over the years, arbitraging has become one of the go-to strategies for crypto traders.
A low correlation in the pricing of an asset across multiple exchanges is indicative of market inefficiencies, which traders – in this case, specifically arbitrageurs – can potentially profit from.

I have used it for years and I can tell you that the trading bot part is not as good as you claim it is, it is decent but not great (certainly much better than almost all other trading bots). I do not know what bitrage brought into the play and how it became, I was there during the very early days of it starting, even on 2017 summer gunthar talked about doing it but it took a while to actually do it, but if it is anything like the gunbot itself I have to say it is probably not as great as you make it out to be, it is not horrible neither, it is somewhere in the middle for it.

I get that you have to act as if it is amazing and that is understandable since you are a reseller, resellers made thousands upon thousands of dollars during the peak period, I remember one guy (aitor or something I think?) made 100k+ a year on it for example, but I can be honest and say that it is "good" but not as amazing as you think.

Thanks for your opinion and I understand where you are coming from. That's still the challenge towards the bot itself. There are ups and downs but it gets the job done and compared to doing it manually, that's just impossible. It's not that I need to but because of the development and time that has been put into it to create that bot, it's better than anything else. I'm just pointing out that it's hard to do manually.