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Author Topic: Buy on BTC-E and Sell on MTGOX  (Read 5370 times)
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May 25, 2013, 12:33:40 PM
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I recently tried an experiment to document the idea of buying low on BTC-E and selling high on Mt Gox Arb opportunity.

I'm from the US.

Price on BTC-E was about 20% below Gox price when I initiated the wire.

On Monday I wired $1000 USD to OK PAY  -                          COST $30.00    Total: 30.00
On Friday OK Pay Received my wires                                     COST 12.00      Total:42.00

OKpay deposits disappeared from btc-e for about a week

The following week I sent 987.00 From OK PAY to BTC-E       COST 2.99       Total: 44.99
BTC-E charged Me 2% to deposit                                            COST 19.74     Total: 64.73


So now I have 967.26 in BTC-E (which is effectively 934.27 when you account for the 30 wire fee and 2.99 ok pay transfer fee)

I buy bitcoin at 127.878 for a 2% fee                                      Cost  19.35      Total:  84.08

Now I transfer these coins to Mt Gox.                                      Cost 1.25         Total: 85.32
Price at the time of transfer 130.03695
Waiting for 6 confirms for the coin to show up in gox.            so far the effective premium is 8.53%

An hour later I was able to sell the 8.8289
btc on Mt gox  for an avg price of 129.755                                    Cost  $6.87       Total 92.19

So I currently have  $1,138.83  cash in gox.  less the 30 wire transfer and the 2.99 ok pay fee =  $1,105.84

Time 2 weeks
profit 105.84.  or  10.58%
cost:  92.19    or   09.22%

(fyi this is not scientific and numbers are only back of the envelope calculations)  To me is seem then unless you can hold large amounts of cash and/or coin on the various exchanges it it a bit more trouble then it is work. - Then what do you risk if one of these exchanges gets shut down/hacked or disappears?

Be curious to hear anyone else's experience. 
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May 25, 2013, 01:27:38 PM
 #2

Very good. Thanks for sharing these numbers.

But what happened next?  You sold the coins at Mt Gox and then?


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May 25, 2013, 01:35:48 PM
 #3

not a newbie idea, this has been the case since 2011.. the only difference is now that mtgox has problems with movement of dollar. its alot harder to shift it back to BTC-E to buy in cheap again.

oh well someone is late to the arbitrage game of 2012, but atleast they think they are smart enough to have thought of it first....., a year later  Grin

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May 25, 2013, 02:12:27 PM
 #4

Very good. Thanks for sharing these numbers.

But what happened next?  You sold the coins at Mt Gox and then?

Just updated.
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May 25, 2013, 02:15:14 PM
 #5

not a newbie idea, this has been the case since 2011.. the only difference is now that mtgox has problems with movement of dollar. its alot harder to shift it back to BTC-E to buy in cheap again.

oh well someone is late to the arbitrage game of 2012, but atleast they think they are smart enough to have thought of it first....., a year later  Grin

I gave up trying to arb over 18 months ago because is was such a pain trying to move funds between exchanges.  However this question is asked again and again on this forum and all the time on freenode at #bitcoin-otc  so I thought I run some rough number. 

As you can see if the price continues to move in your favor you can make a profit.  But it seem to me more risky and costly than it is worth.

But again I'm curious to hear others opinions.
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May 25, 2013, 02:25:34 PM
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I think the best way to do this would be with proper bank wires and $10-30k of money to make it worthwhile.

Wire funds directly to BTC-e, then buy Bitcoin and send it to MtGox.
Sell on MtGox and then wire back to your original bank account.

Then repeat it.

You would need to verify at BTC-e and MtGox to do this.
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May 25, 2013, 02:26:33 PM
 #7

I think the best way to do this would be with proper bank wires and $10-30k of money to make it worthwhile.

Wire funds directly to BTC-e, then buy Bitcoin and send it to MtGox.
Sell on MtGox and then wire back to your original bank account.

Then repeat it.

You would need to verify at BTC-e and MtGox to do this.


would you trust that much funds on either of those exchanges??
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May 25, 2013, 02:37:31 PM
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I would trust both exchanges at the moment. If you want more peace of mind: don't arb with money you can't afford to lose.
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May 25, 2013, 02:44:57 PM
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I think the best way to do this would be with proper bank wires and $10-30k of money to make it worthwhile.

Wire funds directly to BTC-e, then buy Bitcoin and send it to MtGox.
Sell on MtGox and then wire back to your original bank account.

Then repeat it.

You would need to verify at BTC-e and MtGox to do this.


would you trust that much funds on either of those exchanges??

Yes. All my BTC money is on MtGox at the moment.
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May 25, 2013, 06:59:26 PM
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No doubt Gox is the most trusted exchange, but why take unneccessary risk, once i've finished trading I go to blockchain.info, make a paper wallet, print it, and the address is then automatically added as a watch address to my wallet, i then transfer money from Gox to that new address.
When I want to trade again I scan the private key off the print out, (I do this with my phone as it is quicker) which changes the watch only address to a full address, then I transfer the money back to gox again.
Only takes a minute or two once you know what you are doing, but I can sleep easy knowing my money is safe. The only delay is waiting for the money to transfer into Gos when I want to trade again.


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May 25, 2013, 07:07:26 PM
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No doubt Gox is the most trusted exchange, but why take unneccessary risk, once i've finished trading I go to blockchain.info, make a paper wallet, print it, and the address is then automatically added as a watch address to my wallet, i then transfer money from Gox to that new address.
When I want to trade again I scan the private key off the print out, (I do this with my phone as it is quicker) which changes the watch only address to a full address, then I transfer the money back to gox again.
Only takes a minute or two once you know what you are doing, but I can sleep easy knowing my money is safe. The only delay is waiting for the money to transfer into Gos when I want to trade again.




fluidjax

Smart!

Don't want to try to log into gox some day and see that you can't get in or you no longer have access to you $5000 or $10,000 or $100,000 bucks!


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May 26, 2013, 03:22:34 AM
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No doubt Gox is the most trusted exchange, but why take unneccessary risk, once i've finished trading I go to blockchain.info, make a paper wallet, print it, and the address is then automatically added as a watch address to my wallet, i then transfer money from Gox to that new address.
When I want to trade again I scan the private key off the print out, (I do this with my phone as it is quicker) which changes the watch only address to a full address, then I transfer the money back to gox again.
Only takes a minute or two once you know what you are doing, but I can sleep easy knowing my money is safe. The only delay is waiting for the money to transfer into Gos when I want to trade again.




OK I am just gonna risk sounding dumb here.

You said when you are done trading on Gox you transfer your money to a paper wallet? You must mean BTC, not fiat, right?
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May 26, 2013, 03:29:17 AM
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Did you wire to OK Pay from your bank account or MtGox?

Because if it's from your bank account then the loop isn't closed. My bank charge $15 to receive a wire. Or maybe it's possible to do MtGox --> OK Pay --> BTC-E directly?

Great experiment. Thanks for sharing.
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May 26, 2013, 03:55:02 AM
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Did you wire to OK Pay from your bank account or MtGox?

Because if it's from your bank account then the loop isn't closed. My bank charge $15 to receive a wire. Or maybe it's possible to do MtGox --> OK Pay --> BTC-E directly?

Great experiment. Thanks for sharing.

Ahh true.  I wasn't really thinking about closing the loop.

The initial payment was a $1000.00 bank wire to okpay from my US Citibank account at a cost of $30.00.

You know I didn't think of this but now I have to get cash back to btc-e or out back out to my bank account for additional fees!  UGH.


But I'll probably just but more bitcoin.
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August 12, 2013, 10:00:55 AM
 #15

I recently tried an experiment to document the idea of buying low on BTC-E and selling high on Mt Gox Arb opportunity.

I'm from the US.

Price on BTC-E was about 20% below Gox price when I initiated the wire.

I buy bitcoin at 127.878 for a 2% fee                                      Cost  19.35      Total:  84.08

btc on Mt gox  for an avg price of 129.755                                    Cost  $6.87       Total 92.19


i thought you said 20% diff ... 129,755-127,878 = 2% !!

currently there is 11% diff (104 - 93)

I wonder if its possible to level out the fee's that OKPay charges... there are some 0% options...

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August 12, 2013, 02:18:34 PM
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I think the real reason big money people (those that have say, $100,000 or more to play with Bitcoin) aren't exploiting this (because 10% in your timeframe is an EXCELLENT return) is the risk, risk, risk - of having that money move through so many unregulated and untrustworthy locations (BTC-E for example, I love em' don't get me wrong, but lets face it for American's it's very abstract, and partly written in Russian  Wink ) and than MtGox unknowns, cash transfer freezes, banking concerns, etc.

It's all a risk/reward premium, and 10% is worth it to a lot of people so it must be 10% risky...

Cheers for doing this though, excellent to see it in action.

Once GOX bites the dust, I honestly believe the arbitrage will be left to sub-pennies very quickly as new exchanges come online that are more like "real-world" exchanges.

PS. If I wasn't paranoid about hvaing MtGox freeze the account, or my US Bank Accounts frozen, or closed, I'd call up a personal friend and say: "Hey you want 10% every two weeks? Give me a $1,000,000 cash. I'll prove it to you and I'll throw in $100k myself!" but like I said, your bank account gets frozen there goes $1 million of my friends money, and $100k of my own...and if that's easy to get 10% than you gotta think about the realization that the operation is REALLY RISKY  Huh

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August 14, 2013, 08:36:19 AM
 #17

Did you wire to OK Pay from your bank account or MtGox?

Because if it's from your bank account then the loop isn't closed. My bank charge $15 to receive a wire. Or maybe it's possible to do MtGox --> OK Pay --> BTC-E directly?

Great experiment. Thanks for sharing.

Ahh true.  I wasn't really thinking about closing the loop.

The initial payment was a $1000.00 bank wire to okpay from my US Citibank account at a cost of $30.00.

You know I didn't think of this but now I have to get cash back to btc-e or out back out to my bank account for additional fees!  UGH.


But I'll probably just but more bitcoin.
Assuming OKPAY did not charge you crazy fee.
I once did a wire of $2000, on top of what my bank charges, OKPAY charges me around $200. Opened multiple support tickets, and they could not explain why the crazy high fees.

Trading MtGox USD for Dwolla/ACH deposit/Chase cash deposit
https://bitcointalk.org/index.php?topic=90115.0
Buy/Sell Call/Put Bitcoin options https://bitcointalk.org/index.php?topic=99853.0
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August 14, 2013, 08:38:48 AM
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I think the real reason big money people (those that have say, $100,000 or more to play with Bitcoin) aren't exploiting this (because 10% in your timeframe is an EXCELLENT return) is the risk, risk, risk - of having that money move through so many unregulated and untrustworthy locations (BTC-E for example, I love em' don't get me wrong, but lets face it for American's it's very abstract, and partly written in Russian  Wink ) and than MtGox unknowns, cash transfer freezes, banking concerns, etc.

It's all a risk/reward premium, and 10% is worth it to a lot of people so it must be 10% risky...

Cheers for doing this though, excellent to see it in action.

Once GOX bites the dust, I honestly believe the arbitrage will be left to sub-pennies very quickly as new exchanges come online that are more like "real-world" exchanges.

PS. If I wasn't paranoid about hvaing MtGox freeze the account, or my US Bank Accounts frozen, or closed, I'd call up a personal friend and say: "Hey you want 10% every two weeks? Give me a $1,000,000 cash. I'll prove it to you and I'll throw in $100k myself!" but like I said, your bank account gets frozen there goes $1 million of my friends money, and $100k of my own...and if that's easy to get 10% than you gotta think about the realization that the operation is REALLY RISKY  Huh
Agree, especially now that Gox haven't processed USD withdrawals for 2 months.

Trading MtGox USD for Dwolla/ACH deposit/Chase cash deposit
https://bitcointalk.org/index.php?topic=90115.0
Buy/Sell Call/Put Bitcoin options https://bitcointalk.org/index.php?topic=99853.0
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