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Author Topic: How to arbitrage by holding on multiple exchanges?  (Read 289 times)
hoboDreamz
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March 05, 2017, 03:28:21 PM
Last edit: March 05, 2017, 04:39:28 PM by hoboDreamz
 #1

Hi. I was thinking of doing arbitrage betwen different exchanges but im a bit at loss how to do it. If i, say, buy at exchange 1 and sell at exchange 2, profits are usually dwarfed by sending the coin to the other exchange(i think).

So i was thinking about something else. "People" have talked about holding coins on both exchanges and simply buying on exchange 1 and selling on exchange 2. However, how can this be profitable?

Say i buy dash at exchange 2 waiting for exchange 1 to be lower in price. Well, i stil have to buy it don't i, so there's a potential profit loss there. Say i wait for exchange 1 to be lower in price and then buy at exchange 1 and sell at exchange 2; well even if its not so expensive on exchange 1 it may still be a higher price on exchange 2 and so i will lose money... Only if its lower on exchange 1 and it is higher on exchange 2 than the price i bought at initially will i make money, so i have to account for this fact.

Ok, so say it is lower buy price on exchange 1 than exchange 2 AND exhange 2 has a higher sell price than i bought it initially there. I then buy dash at ex1 and sell my dash on ex2. I make a profit.

I now have dash on exchange 1 and no dash at exchange 2. I now have to wait for ex 1 to have higher sell price - and also have higher sell price than the buyprice was - than ex 2 have buy price. Ex 2 also have to have lower buy price than the sell price was when i bought it.

At this point why do i "arbitrage" at all? Why wouldnt i just do the much simpler buy low sell high? Am i missing something here?

edit: hope this makes sense. or enough of it Tongue
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saerlingen
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May 20, 2018, 04:51:03 PM
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-snipped-
Ok, so say it is lower buy price on exchange 1 than exchange 2 AND exhange 2 has a higher sell price than i bought it initially there. I then buy dash at ex1 and sell my dash on ex2. I make a profit.

I now have dash on exchange 1 and no dash at exchange 2. I now have to wait for ex 1 to have higher sell price - and also have higher sell price than the buyprice was - than ex 2 have buy price. Ex 2 also have to have lower buy price than the sell price was when i bought it.

At this point why do i "arbitrage" at all? Why wouldnt i just do the much simpler buy low sell high? Am i missing something here?
-snipped-

This is entirely possible, in fact, I am running a bot that does this. You do not make it clear in your post, so i'll do it. This is really only possible through API automation. Attempting it manually will almost certainly result in missed trades.

There are also problems with the technique.

Firstly, since rebalancing between exchanges will incur withdrawal fees you either:

1. Rebalance "naturally" by waiting for the right market condition (might miss trades before markets turns in exchanges)
2. Wait till profits exceed costs of rebalancing (often you can minimize costs by i.e buy x currency with cheap withdraw fees)

Then there is also the issue of missing out on counter trades where your options are to let the order sit till met, or trade it off for a loss, possibly break-even if lucky.

missing out on the first trade is fine, just skip; partial fills are a different story.

In regards to "why do arbitrage at all":

By doing arbitrage, you trade on orders available in the orderbooks and thus (assuming you succesfully can execute the trades) remove the element of speculation ; if you "buy low sell high" you have to wait for the low/high to come, if it ever comes.

I encourage you to try it out if you have any coding capabilities, it's a great project and will yield profitable opportunities. How often, and how big profits i'll let you find out on your own.

note: I hope you or others will find this useful, i felt bad you had no replies for so long. Smiley

best regards,

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July 13, 2018, 08:00:23 AM
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Arbitrage trade is not very profitable now, if you do it manually. Use bots for these tasks, as they will do it much faster and more efficiently for you, but be careful and keep an eye on the bot.

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July 13, 2018, 08:08:48 AM
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Arbitrage trade is not very profitable now, if you do it manually. Use bots for these tasks, as they will do it much faster and more efficiently for you, but be careful and keep an eye on the bot.
Bots are not very profitable too. 3-5% per month is maximum gain from arbitrage strategies.
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July 13, 2018, 12:48:46 PM
 #5

Hi. I was thinking of doing arbitrage betwen different exchanges but im a bit at loss how to do it. If i, say, buy at exchange 1 and sell at exchange 2, profits are usually dwarfed by sending the coin to the other exchange(i think).


well
if u say like that,
the profit just from difference in base price selling or buying
but yes, now
hard to get like that,
for example
on october last year
price coin PGL on etherdelta soo cheap
but on coinexchange soo high
so i buying from etherdelta then sell it on coinexchange.

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