Arbitrage management

[Leo__th]

Hi guys, i'm thinking about making an arbitrage bot but i'm not sure how to manage my wallet once an arbitrage is over.

On my example, i have ~0.1BTC on 4 different platform.

Lets say there is 3% gap for BTC/ETH between 2 platform. (eg. buy 0.1BTC; sell 0.103BTC)
So :
1) I buy 1 ETH at 0.1 BTC on platform 1, cost me 0.1005 BTC with 0.5% fees.
2) I send 1 ETH to platform 2 (0.006 ETH transactions fees).
3) Once i received my 0.994 ETH on platform 2, i sell it for 0.103$ (if the price is still the same), receive 0.10187 BTC with 0.5% fees.

So i made 0.00187-0.1005 = 0.00137 BTC (1.37% benefit) on the all process. The thing is i have now more money on platform  2 than platform 1.
Transferring BTC back is extremely expensive so it will cost me much more than what i made.

My questions are :
-How to deal with price variation before i receive my transfer on platform 2. I guess if there is many arbitrage bot live, they can equalize the price before i can sell it back.
-How to manage my wallets at the end, should i just wait to find an other arbitrage between platform 1 and 2 (on the other side) to send back money to platform 1?
-Is that correct to do arbitrage with usd to usdt? (ex platform1 : ETH/USD, platform 2 : ETH/USDT)

Thanks !

[cpfreeplz]

In order for you to make money consistently at arbitrage you'll need to have a lot of money so the transaction fees are so small that it doesn't eat so far into your profits. Sending 100 bitcoin for 0.0005BTC is a hell of a lot cheaper percentage wise than 0.1BTC. That's where the real money is.

If you're not independently wealthy, this may not work out as well as you think. Not with bitcoin or eth anyway, but maybe some smaller alts on lesser known exchanges.

[squatz1]

In order for you to make money consistently at arbitrage you'll need to have a lot of money so the transaction fees are so small that it doesn't eat so far into your profits. Sending 100 bitcoin for 0.0005BTC is a hell of a lot cheaper percentage wise than 0.1BTC. That's where the real money is.

If you're not independently wealthy, this may not work out as well as you think. Not with bitcoin or eth anyway, but maybe some smaller alts on lesser known exchanges.

While it is a good idea to go to lesser known alts, the problem is that there isn't as many arbitrage opportunities as most usually for lesser known alts not many exchanges are supported


Though back on what OP said about Arbitrage, it's not for people that are just trying to do it with small amounts of money. If it was, you'd see SO many people (including myself) getting involved and then it wouldn't be as profitable as it seems to be.

[Leo__th]

@cpfreeplz, Thanks, i totally understand what you say.
My example was mostly to explain how i see i'll do arbitrage, i won't talk about amount there.

I'm mostly interested to know how people manage there wallet for arbitrage, maybe they don't send back the initial amount, maybe they always do. Maybe they just trade ETH market because of the transaction delay and fees. And i wonder if the price can change a lot with few minutes interval.

Thanks.

[Serpens66]

if you can't answer all those questions to yourself, you do not deserve any profit.

[Beerwizzard]

-How to deal with price variation before i receive my transfer on platform 2. I guess if there is many arbitrage bot live, they can equalize the price before i can sell it back.

The arbitrage bonus can be comcidered as a payment for taking a risk of loosing a certain % of your money during the transfer. Notify that there can be many other different issues with exchanges during funding / withdrawal that can freeze your money for a long time giving  you insane loses.

-Is that correct to do arbitrage with usd to usdt? (ex platform1 : ETH/USD, platform 2 : ETH/USDT)

Tether recently experienced some troubles so it might not be the best idea to hold your money in USDT if you can just exchange crypto to USD.

[Ashimwe]

In order for you to make money consistently at arbitrage you'll need to have a lot of money so the transaction fees are so small that it doesn't eat so far into your profits. Sending 100 bitcoin for 0.0005BTC is a hell of a lot cheaper percentage wise than 0.1BTC. That's where the real money is.

If you're not independently wealthy, this may not work out as well as you think. Not with bitcoin or eth anyway, but maybe some smaller alts on lesser known exchanges.

There is alot of sense in this

[akamit]

Arbitrage is not an easy thing when it comes to find an opportunity.
Exchange fees won't be a problem if you have a decent arbitrage capital. BTC1 maybe a decent capital to start arbitrage.

My questions are :
-How to deal with price variation before i receive my transfer on platform 2. I guess if there is many arbitrage bot live, they can equalize the price before i can sell it back.
-How to manage my wallets at the end, should i just wait to find an other arbitrage between platform 1 and 2 (on the other side) to send back money to platform 1?
-Is that correct to do arbitrage with usd to usdt? (ex platform1 : ETH/USD, platform 2 : ETH/USDT)

Ans #1
You can't do anything, you don't have control over it. See challenge 1 below.

Ans #2
Both the steps are correct. It all depends on the situation and your decision.
But in my case I will try to transfer the first/main currency to platform #1 after arbitrage ends in platform #2, it is because to do the repetition if possible.

Ans #3:
how do you plan to convert usdt to usd at the end?
Platform #1 (trade fee + withdraw fee)
Platform #2 (trade fee + withdraw fee)
End fee (usdt to usd conversion fee)
Make your calculation for every steps and then execute the trades. And don't forget to check below challenges.

The main challenges about coin arbitrage is as follows,
- to know if the coin has enough buy order in platform 2.
- to calculate every exchange fees and know the proper profit/loss.
- the delay on tx confirmation and exchange withdraw processing time - this may spoil your arbitrage and you may hodl that coin for long time.
- to find an arbitrage opportunity -  not all exchanges accepts same payment processing system. Maybe for this issue some peoples do triangle arbitrage.

I like arbitrage very much, but due to heavy challenges I'm unable to do regularly.
Two days ago there was a good arbitrage opportunity between cryptopia and yobit for the coin XVG and I didn't took risk due to the challenge 3.
But few days ago I tried an arbitrage from yobit to cryptopia for the coin RDD, it was successful even I had to face with the challenge 3.

Arbitrage is very profitable if you are able to repeat... Keep searching for arbitrage opportunity.

Good Luck!

[melamiras]

Hi guys, i'm thinking about making an arbitrage bot but i'm not sure how to manage my wallet once an arbitrage is over.

On my example, i have ~0.1BTC on 4 different platform.

Lets say there is 3% gap for BTC/ETH between 2 platform. (eg. buy 0.1BTC; sell 0.103BTC)
So :
1) I buy 1 ETH at 0.1 BTC on platform 1, cost me 0.1005 BTC with 0.5% fees.
2) I send 1 ETH to platform 2 (0.006 ETH transactions fees).
3) Once i received my 0.994 ETH on platform 2, i sell it for 0.103$ (if the price is still the same), receive 0.10187 BTC with 0.5% fees.

So i made 0.00187-0.1005 = 0.00137 BTC (1.37% benefit) on the all process. The thing is i have now more money on platform  2 than platform 1.
Transferring BTC back is extremely expensive so it will cost me much more than what i made.

My questions are :
-How to deal with price variation before i receive my transfer on platform 2. I guess if there is many arbitrage bot live, they can equalize the price before i can sell it back.
-How to manage my wallets at the end, should i just wait to find an other arbitrage between platform 1 and 2 (on the other side) to send back money to platform 1?
-Is that correct to do arbitrage with usd to usdt? (ex platform1 : ETH/USD, platform 2 : ETH/USDT)

Thanks !

Your are pointing at the main problem with arbitrage, that is transaction fees. You need to arbitrate large amounts, at least 1 or better 2 BTC before rebalancing and that is what makes it difficult. Anyway, you can convert to some alt easier to move.

[lenj]

Arbitrage is good strategy if you can consistently because there many time that the price between 1 to another exchanger is different.
After the first arbitrage i think you should send back your money to previous managing so you can see a chance to do another arbitrage in both exchanger because as you know exchanger A is not always higher price than Exchanger B and sometime lower.
For arbitrage, recent problem of fee and slow transaction does not make you feel good if you use pair in bitcoin. Pair usd or eth is more suggested.

[Granxis]

There is not much you can do against price changes. But after the transfer, you can make a sales order. In this case, you may need to wait a bit, maybe this waiting period can be very long.

[gopnik]

Hi guys, i'm thinking about making an arbitrage bot but i'm not sure how to manage my wallet once an arbitrage is over.

On my example, i have ~0.1BTC on 4 different platform.

Lets say there is 3% gap for BTC/ETH between 2 platform. (eg. buy 0.1BTC; sell 0.103BTC)
So :
1) I buy 1 ETH at 0.1 BTC on platform 1, cost me 0.1005 BTC with 0.5% fees.
2) I send 1 ETH to platform 2 (0.006 ETH transactions fees).
3) Once i received my 0.994 ETH on platform 2, i sell it for 0.103$ (if the price is still the same), receive 0.10187 BTC with 0.5% fees.

So i made 0.00187-0.1005 = 0.00137 BTC (1.37% benefit) on the all process. The thing is i have now more money on platform  2 than platform 1.
Transferring BTC back is extremely expensive so it will cost me much more than what i made.

My questions are :
-How to deal with price variation before i receive my transfer on platform 2. I guess if there is many arbitrage bot live, they can equalize the price before i can sell it back.
-How to manage my wallets at the end, should i just wait to find an other arbitrage between platform 1 and 2 (on the other side) to send back money to platform 1?
-Is that correct to do arbitrage with usd to usdt? (ex platform1 : ETH/USD, platform 2 : ETH/USDT)

Thanks !

ahah believe me there is no way you can make any money doing that and no bot can efficiently perform
cross exchange arbitrage as of today

Cryptocurrencies arbitrage isn't profitable anymore ayway, unless you know how to program  and trade with extremely low latency bots that can outperform the domestic bots working on the exchanges servers(certainly not the junk sold in the retail); and even then it would require months of develoment and 24/7 monitoring of the activity and constant adjustements of strategies and updates by developers as it a highly competitive business in a perpetual race. you will be trading margins under 0,3%

The manual cross arbitrage ship has already sailed months / years ago, as the market as grown increasingly competitive and aggressive

You'd better educate yourself and try your luck with mid-long term trading strategies which have been yielding solid returns until now, rather than trying this near zero profit business only accessible to the most advanced and well funded traders
You could just have bought ETH and hold for the past months and made 30x what you have done doing crappy amateur arbitrage

[Will.Smith]

Arbitrage with algorithms is stable business but it needs much more money to have good interest for those 3%

But without algorithms you can earn by buying cheaper on ED while waiting the bigger exchanges if you know that project is strong enough to hold it for some time.

[germa66]

actually arbitration will be more effective if done when there is a striking price difference so that we will receive profit and not lose much fund by transaction fee. so if we do arbitrage try to find the difference in price and high trading volume to avoid the falling price very far.

[Herbert2020]

increase your amount so that it covers the whole order on the platform that is making the arbitrage opportunity.
if it is a small order like 0.001BTC worth of it then it is not worth trying it. but if it is bigger like 1BTC for example, then trade with that much and when it is filled there is no more arbitrage opportunity so you don't need to transfer bitcoin back to platform 1 and also if you make enough profit then paying something like a 0.001BTC transaction fee for bitcoin should not matter.

and if you are not making enough to cover a transaction fee then it is not even worth bothering with this type of trade because the risk is high, so the reward must be high enough to create the incentive for performing it.

[melamiras]

if you can't answer all those questions to yourself, you do not deserve any profit.

Hard answer but fair. There are too many people out there that want to make a living of trading and cannot even put a stop-loss to avoid being dumped in a hole when the giga-dips occur.

[melamiras]

actually arbitration will be more effective if done when there is a striking price difference so that we will receive profit and not lose much fund by transaction fee. so if we do arbitrage try to find the difference in price and high trading volume to avoid the falling price very far.

Well, of course that is the basics, but it is very infrequent to find such differences, except in coins with very low volume or in EDS (EtherDelta Sucks), or probably in some other decentralised exchanges.

[maeusi]

To make profits on arbitrage trading you should filter out markets with low volumen to avoid big losses. Buy and sell orders could have big differences on low volumen, so that you maybe not get the price, that is actually listed on the exchangers.

[shimbark123]

Becareful in arbitrading guys. Some exchange doesn't get your fund immediately for some reason. For example, the hype of tron(trx) in hitbtc. The price of trx in binance was to low. And people got to buy trx in binance and arbitrage in hitbtc. But their fund were hold by hitbtc because of many funds incoming in their wallet.

Try calculating the funds in sending your funds. The flat fee should be considered in this.

[Niflore]

The issue is that some exchanges delay receiving bitcoin/etc and until it gets credited in your account its vallue might decrease( as it happened in my case, and while the arbitrage was succesful as an idea, it failed on practice).

[lopez cryptomania]

These are valid questions so therefore I leave it up to the professionals. I'm keeping my eyes on this upcoming ICO they are releasing the first arbitrage exchange focused on bringing in the masses with their easy to use UI and by leveling trading volatility. Arbitrage is a great way to make a profit especially once you're able to trade across the world with major exchanges by utilizing this platform. They will solve this problem you have of getting your profit back into your initial wallet.

https://bitcointalk.org/index.php?topic=3085831.msg31823480#msg31823480