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Author Topic: Why no arbitrage?  (Read 1796 times)
Sir_lagsalot
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November 02, 2015, 10:01:19 PM
 #21

Mate, there are plenty of people arbitraging... Is that a word?

Most probably people are already taking advantage of it, but are keeping quiet. That's why you haven't heard of it. Arbitraging is highly profitable, so people rush to make as much profit as they can before the prices balance out.

But now that you shouted it out, I bet the process will balance in a matter of hours.


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November 03, 2015, 01:18:55 AM
 #22

Bitcoin has not been swamped with institutional investors yet.
Once you have algorithmic trading and computers monitoring prices, all arbitrage opportunities will be squeezed out.

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November 03, 2015, 02:32:32 AM
 #23

I am going to give arbitrage a shot for the next hour, will let you all know how it goes and what my strategy is:

btw, okcoin wouldn't let me validate an account, seems huobi is ok.... we will see, hope to be several BTC richer in the morning....

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November 03, 2015, 02:58:48 AM
 #24

Ok I easily setup an account on Huobi and was able to transfer btc into huobi. I am already setup on BTC-E.

Verification was none, and after setting up withdrawal security measures I traded BTC for CNY, then bought LTC, then transferred LTC to BTC-E to buy back BTC.

Net result exact same BTC that I started with. So It seems LTC are more expensive on Huobi than BTC by the same factor as huobi has more expensive BTC than BTC-E.  I probably could have figured this out myself doing some currency math but wanted to be setup on Huobi anyway.

bottom line no advantage unless you can get your US dollars or CNY into BTC-E to by BTC directly with dollars

Arbing with CNY to LTC back to Bitcoin gained me nothing.

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bitmarket.net
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November 03, 2015, 10:30:11 AM
 #25

There are fees when it comes to withdrawals and it takes too much time for funds to transfer from one exchange to another. Additionally, there are several verification to go through. Profit isn't always guaranteed too.


this, by the time the money is transferred from one exchange to the other, you have paid several withdrawal fees and several days may have passed.

during this time the window of profit may have been gone.

it's pretty risky to commit arbitrage, and it's even more difficult if you want to do it from huobi to bitstamp or something, because of the CNY -> USD also costs fees.

That is the main reason why I stopped doing arbitrage, Day trading is more profitable for me.

You have to consider the risk / reward ratio.

If you are a good day-trader, you can probably make more day-trading with 10 btc than doing the arbitrage with 10 btc.
That's because you are also taking much more risk of losing money if you are doing day-trading.

Arbitrage, if done properly is by definition 100% risk free, therefore one should be confident allocating more capital to such strategy.


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November 03, 2015, 11:11:26 AM
 #26

Arbitrage, if done properly is by definition 100% risk free, therefore one should be confident allocating more capital to such strategy.
It is not, as the there is a time needed for transferring your funds from one place to the other.
Usually three confirmations for transactions in BTC are required, other altcoins may be a bit faster, fiat is definitely slower.
thus, there is a non-negligible time during which you are exposed to risk of the price falling without having any option to react.

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bitmarket.net
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November 03, 2015, 11:46:04 AM
 #27

Arbitrage, if done properly is by definition 100% risk free, therefore one should be confident allocating more capital to such strategy.
It is not, as the there is a time needed for transferring your funds from one place to the other.
Usually three confirmations for transactions in BTC are required, other altcoins may be a bit faster, fiat is definitely slower.
thus, there is a non-negligible time during which you are exposed to risk of the price falling without having any option to react.

What I think you are describing is buying bitcoins at one exchange and transferring to another to sell it.
In such case it is not a real arbitrage, because it means that for certain period of time you will have long bitcoin position.

Arbitrage means that your net position is always zero, so you are not exposed to the price risk.
To do that you would need to maintain balances on both exchanges and do both trades at the same time.

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Snail2
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November 03, 2015, 01:53:25 PM
 #28

I think the big issue is moving fiat to exchanges. You need a lot of bank accounts all across the world loaded with money to do arbitraging really effectively.
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November 03, 2015, 03:13:01 PM
 #29

Arbitrage, if done properly is by definition 100% risk free, therefore one should be confident allocating more capital to such strategy.
It is not, as the there is a time needed for transferring your funds from one place to the other.
Usually three confirmations for transactions in BTC are required, other altcoins may be a bit faster, fiat is definitely slower.
thus, there is a non-negligible time during which you are exposed to risk of the price falling without having any option to react.

not only that but there are fees to be added, with arbitrage usually done with bot, you do a lot of movements, which translate in a lot of fees

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uki
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November 03, 2015, 04:44:11 PM
 #30

Summing it all together, we have fees, different fiat accounts, different exchange accounts plus transfer times.
that requires some time in advance to set it up properly.
Only after you setup such environment you are able to do the arbitrage selling at the same time as buying somewhere else.
That means you would have to block all your funds on these accounts well in advance in order to be prepared once the arbitration opportunity happens.
How many time this year we had such situation that after removing fees such arbitrage would be profitable?

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bitmarket.net
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November 04, 2015, 05:16:54 PM
 #31

Summing it all together, we have fees, different fiat accounts, different exchange accounts plus transfer times.
that requires some time in advance to set it up properly.
Only after you setup such environment you are able to do the arbitrage selling at the same time as buying somewhere else.
That means you would have to block all your funds on these accounts well in advance in order to be prepared once the arbitration opportunity happens.
How many time this year we had such situation that after removing fees such arbitrage would be profitable?

Depending on what you mean by "profitable".
Is it enough to cover all your costs or to enough to make pay for your time and effort ?

Arbitrage happens all the time, even between major exchanges, such as Bitfinex and Bitstamp, but usually the volumes involved are not enough to worth bothering.


For more arbitrage opportunities my advice is to look at markets trading bitcoins in different currencies.

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arbitrage001
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November 05, 2015, 03:22:00 PM
 #32

Arbitrage, if done properly is by definition 100% risk free, therefore one should be confident allocating more capital to such strategy.
It is not, as the there is a time needed for transferring your funds from one place to the other.
Usually three confirmations for transactions in BTC are required, other altcoins may be a bit faster, fiat is definitely slower.
thus, there is a non-negligible time during which you are exposed to risk of the price falling without having any option to react.

When transferring fiat, you are not taking any downside risk of price fluctuation.

When transferring btc, you can hedge your position by shorting the equivalent amount of btc for negligible fee.
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November 05, 2015, 08:01:14 PM
 #33

if there is a bot then ok, but if not with all time loss,fees, fluctuation..just to risky
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November 05, 2015, 08:14:56 PM
 #34

if there is a bot then ok, but if not with all time loss,fees, fluctuation..just to risky
If you know what you are doing it is not risky at all. After all you are doing instant transactions, and selling all your coins at once without waiting for price to change.
Where is the risk in that? It is not that this is illegal or something.
MrsHash
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November 05, 2015, 09:00:53 PM
 #35

I've never seen such price differences between exchanges. Anyone know why arbitrage isn't happening? Seems like you could make good money with arbitrage right now.
Bitfinix >$22 BTC-E
Houbi >$44 BTC-E
Bitstamp >$20 BTC-E
I think somebody is doing it. But they are doing it not exposing to others.

Sure that it's true
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November 06, 2015, 01:36:46 AM
 #36

I've never seen such price differences between exchanges. Anyone know why arbitrage isn't happening? Seems like you could make good money with arbitrage right now.
Bitfinix >$22 BTC-E
Houbi >$44 BTC-E
Bitstamp >$20 BTC-E
I think somebody is doing it. But they are doing it not exposing to others.

If somebody is doing it, the price difference should decrease and eventually become negligible (insufficient to cover even transaction costs).
For example, if  somebody is buying at BTC-e and selling at BitStamp to take advantage of the price difference between the 2 exchanges, the price at BTC-e would increase and BitStamp would decrease.
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