ARBITRAGE: Bitstamp -> CEX.IO - Proof of Concept

[Alice Nuttal]

Hi everyone! 

I am newbie on bitcointalk.org and hope that I created thread in right place.

I have an idea how to make arbitrage between exchanges and make money without any risk.

But I am trying to undertand where I am wrong.



The idea is simple - buy bitcoin on Bitstamp @$2374.99 and sell on CEX.IO @$2540.00.
Profit is $165.01 per 1 BTC.


Could you dab me where I am wrong? 

[Serpens66]

it is always fee and withdraw time.

so compare all fees and then try it with small amount.

But I can tell you the "problem" (see official cex thread):
Wire and also SEPA transfers taking up to 20 days!

So yes you can make profit. But you have to wait 20 days to get your funds.

[Alice Nuttal]

Thanks for reply.

I am calculating fees now as well.

To wire deposit to Bitstamp is 0.05% and about $30 as bank fee.
It is about 2 days.

Let's assume we have 20K deposit.
Fee is $40 on this stage.

To withdraw on card from CEX.IO you can up to 10K per day with Verified Plus account
https://cex.io/limits-commissions#/direction/withdrawal ($3.80 per transaction)

For fast turnaround you need to have one bank to withdraw money to card (from CEX.IO) and to send wire (to Bitstamp)

[Serpens66]

sounds like it could work, but I have no experience how easy the card withdrawal is.

I would suggest you try it

[Idrisu]

Arbitrage is good if it can cover the exchangers fees and fiat withdrawal fee. Before you go into arbitrage, you need to calculate these: Fees you will pay during your local currency in purchasing bitcoin from the first exchanger, fees you will pay in sending your coins from the first exchanger to second exchanger and fees you will pay when your are withdrawing your capital and profit or loss to your local currency. If this fees are deducted and you are still in profit the it is worthwhile but if it cannot cover the fees then you should have a rethinks.

[recklessMe]

Well, I wouldn’t be so sure about its profitability. 
Easy money never seemed to be a good idea. From my own experience there are always hidden dangers.
Of course, it sounds nice.
But is there anyone, who has practiced arbitrage? Does it really bring money? 

[mrBTCman]

Regards!
I tried bitcoin arbitrage several times. If you are looking for passive income, this is the right opportunity to consider.
The most tedious thing here is to monitor bitcoin prices and pick best-matching exchanges. But you seem to have done a good job already. I would personally decide in favor of cex and bitstamp now.
I totally agree with the previous answers and recommend you to make careful calculations, but at a rough guess it may work.
Probably, I should try it myself.

[panzerdeni]

As most of above said it is risky. But it is manageable. I tried it many times and made some profit. Most important at least for me is the time it takes and the fees. And check what is the volume. You can make profit if you look around.

[davida]

I have taking a careful look into the arbitrage between the 2 website and concluded theoretically that it will work profitably but it shall require a minimum of 5 btc in order to really tap into the profits.

In practical terms of this business between these websites, the buy order volume at https://cex.io/btc-usd is low compare to the sell order, this will have a negative effect on the arbitrage business because most people only use https://cex.io/btc-usd as a dumping ground for Bitcoin instant profits and this could make the business to get saturated quickly.

[Herbert2020]

if you are new to arbitrage know this:
 if it was possible someone with more experience would have been doing it already! so the difference wouldn't have existed in first place.

now lets look at the orderbooks.
if you sell ~1BTC the price will drop $10
and if you sell ~2BTC the price will drop $25

and with your 20K deposit assumption you get 8.4BTC
and selling that means price will drop $50

apart from withdrawal fee you will be paying trading fees too.
$20,000 * 0.25% = $50 * 2 = $100
i don't know how much the fiat deposit in bitstamp and withdrawal from cex.io will cost

you need at least $20,100 + as much those two fees cost.
now figure out how much the price should be for you to sell!
(20,100+ double fees) / 8.4

[davida]

if you are new to arbitrage know this:
 if it was possible someone with more experience would have been doing it already! so the difference wouldn't have existed in first place.

now lets look at the orderbooks.
if you sell ~1BTC the price will drop $10
and if you sell ~2BTC the price will drop $25

and with your 20K deposit assumption you get 8.4BTC
and selling that means price will drop $50

apart from withdrawal fee you will be paying trading fees too.
$20,000 * 2.5% = $500 * 2 = $1000
i don't know how much the fiat deposit in bitstamp and withdrawal from cex.io will cost

you need at least $21,000 + as much those two fees cost.
now figure out how much the price should be for you to sell!
(21,000+ double fees) / 8.4

I actually respect your opinion and analysis but i totally disagree with you sir.

Visiting these 2 websites you will discovered that the deposit and withdrawal fees shall not have any serious effect on your profits because the margin difference is really wide.

1, The potential threat to this arbitrage is the volume of the buy order.
2, Some countries cannot make a withdrawal and such countries were all listed.

[stomachgrowls]

if you are new to arbitrage know this:
 if it was possible someone with more experience would have been doing it already! so the difference wouldn't have existed in first place.

now lets look at the orderbooks.
if you sell ~1BTC the price will drop $10
and if you sell ~2BTC the price will drop $25

and with your 20K deposit assumption you get 8.4BTC
and selling that means price will drop $50

apart from withdrawal fee you will be paying trading fees too.
$20,000 * 2.5% = $500 * 2 = $1000
i don't know how much the fiat deposit in bitstamp and withdrawal from cex.io will cost

you need at least $21,000 + as much those two fees cost.
now figure out how much the price should be for you to sell!
(21,000+ double fees) / 8.4

I actually respect your opinion and analysis but i totally disagree with you sir.

Visiting these 2 websites you will discovered that the deposit and withdrawal fees shall not have any serious effect on your profits because the margin difference is really wide.

1, The potential threat to this arbitrage is the volume of the buy order.
2, Some countries cannot make a withdrawal and such countries were all listed.

Those 2 things are commonly be encountered or shall we called the risk when we do arbitrage trading. yes,risk would somehow near to zero as long you do know how to calculate all the fees and duration of transfers. This is only the thing that do really affect our profits and if we saw we are on gain then better to continue this thing for generating some income  

[dossantosleite]

You should register on cex.io and you will see that selling btc price is much lower. For example, right now btc price in usd on cex.io is $2585, but if you want to sell btc inside this exchanger, the rate is $2392 for 1 btc...

[BitcoinHodler]

You should register on cex.io and you will see that selling btc price is much lower. For example, right now btc price in usd on cex.io is $2585, but if you want to sell btc inside this exchanger, the rate is $2392 for 1 btc...

you made me go an log in to my CEX.io account after a year or so
here is a screenshot of the market at https://cex.io/trade
you can see that when you sell you sell to 2600ish price, so i guess you were looking in a wrong place that you saw $2392

[Alice Nuttal]

now lets look at the orderbooks.
if you sell ~1BTC the price will drop $10
and if you sell ~2BTC the price will drop $25

strange assumption. Do you really think such amount will influence the market?

[Alice Nuttal]

apart from withdrawal fee you will be paying trading fees too.
$20,000 * 2.5% = $500 * 2 = $1000
i don't know how much the fiat deposit in bitstamp and withdrawal from cex.io will cost

according to fee schedule it's 0.25%, and not 2.5% https://www.bitstamp.net/fee_schedule/

[Monnt]

if it was possible someone with more experience would have been doing it already! so the difference wouldn't have existed in first place.

Yes, that must be one of the practical problem of arbitrage trading. Price gaps may fade away in quick time or will fall into narrow range which may not cover the trading and withdraw fees. Probably we may utilize such gap for one time and these gaps may not available for subsequent tries.

here is a screenshot of the market at https://cex.io/trade
you can see that when you sell you sell to 2600ish price

Now prices are into $2500 ranges. It means cex prices started to converge toward other market prices. (maybe someone started arbitrage after seeing this topic  )

[dossantosleite]

You should register on cex.io and you will see that selling btc price is much lower. For example, right now btc price in usd on cex.io is $2585, but if you want to sell btc inside this exchanger, the rate is $2392 for 1 btc...

you made me go an log in to my CEX.io account after a year or so
here is a screenshot of the market at https://cex.io/trade
you can see that when you sell you sell to 2600ish price, so i guess you were looking in a wrong place that you saw $2392

my mistake, i clicked on sell/buy section not on actual trade section...

[el kaka22]

sounds like it could work, but I have no experience how easy the card withdrawal is.

I would suggest you try it

Before trying, I like to suggest to make sure about viable fiat withdraw methods from cex. More importantly, need to verify what the requirements to be eligible for fiat withdrawals. Moving fiats might be a very big concern here. If anyone come with feasible solutions for fiats movements then he can enjoy sure shot profits from these type of arbitrage trading.

[norad73]

Instead of trying to arbitrage with FIAT, why not arbitrage with coin pairs?  There seem to be large enough differences between exchanges that it could be profitable. Also, less fees and faster transfers because it is all in crypto mean that one can probably cycle the arbitrage over and over again.

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