Is this a good idea?

[hankhill69]

Hi Everyone,

I have created a profitability calculator by telling you which currency (based on cryptsy market) is the most profitable compared to the price of bitcoin. The calculator works by turning bitcoin into litecoin then the calculator with already the prices fed into the spreadsheet tells you which coins are making profits (whether) then with the litecoins you buy that currecncy and re convert that currency back into USD. It has been making me money. I want to sell subscription to this calculator what do you guys think? I can post a few snapshot if need be.

BTC->LTC->Alternative currency->BTC->USD

P.S Why are open orders on cryptsy taking forever to sell?

Thank you,
Hank Hill

[jonanon]

Cool idea, can you proof of it actually working? How do you define which currency is likely to be profitable 

[hankhill69]

I dont want to let the math out, but this has been working great for me and I plan on automating this process with bots and API will be feeding in data for the currencies.





First image anything in red has to be entered manually.

Second image anything in blue is positive

Any questions please feel free to ask, but what is your opinion of this?

[MrBitHero]

Have you actually traded yourself yet, or is it just virtual profits in Excel?

Firstly, it's a great idea, arbitrage always is. But arbitrage is always limited by math, if the basic numbers don't work, the idea loses its complete value. Now the interesting question always is, if you make money doing this, why sell your technique? Especially a technique that has only 1 consequence, fewer arbitrage opportunities for yourself, thus canibalizing on any potential profits. There's only few reasons to still do this.

So that makes me skeptical from the get go.

As for the numbers. I ran a few theoretical cycles where you start with BTC and end with BTC. First you buy LTC, then buy a coin in LTC, then sell the coin in BTC. The numbers aren't really favourable, nor are they the other way due to the split between buy and sell prices. Going from USD to USD actually does work, but that's more an indication that BTC/LTC, BTC/USD, LTC/USD allow small arbitrage opportunity rather than any ltc-btc differences on alt coins. The transaction frequency is high too, so you're looking at least a percentage point in fees normally. When you factor in delays and price changes it becomes very hard to justify the risk on such small margins if they exist at all.

Generally you'll get two categories. Uninteresting, unhyped, dormant coins where due to a lack of interest arbitrage occurs between BTC and LTC. Problem here is that you usually have extremely low open orders and high sell/buy differences, because no coin-platform has a marketmaker yet. That means that if anything exists at all, it's at super low volumes of <$25, which is not great if you're looking at 2-3% profit. You also have a big effect on the market straight away.
On the other hand you have high volume coins like Quark, barely any arbitrage with enough volatility to destroy any tiny margins. Not worth your while comparing prices manually.

If you can automate it, that's great. If you trust in Cryptsy and their lack of transaction delays (don't), any calculation showing a profit should be a profit. I don't think there will be many opportunities, but if you leave it on 24/7, why not. As long as you stay away from fiat (apart from cashing out in weekly/monthly intervals), arbitrage should be fast enough to work.

[hankhill69]

I have traded and made a profit, I HATE cryptsy losing money waiting on the dam thing so that is a huge hurdle at the moment, and all i want from cryptsy is the API key to plug into this excel sheet. But if i understand this you do not think this is a good idea due to the fact that profit margins are to low between exchanging the currencies? I am correct? I agree no need to sell this calculator but It has made me a good bit of money around 5k in the last 2weeks i have been running it. But can you tell how can I get around cryptsy wait times? For this system to truly work I need trades to be instantly. My end goal is I want to be able to do this per second, if the numbers show positive then buy and sell immediately.

P.S the 2%buy fee and 3%sell have all been calculated in there.

Thanks alot for the expiation and help

[jonanon]

You'll have to bear in mind the price quoted may only be for a tiny amount - if you try to sell a large amount there may not be the demand.

Also on Cryptsy there is sometimes a large lag which could turn any potential profit in to a loss.

[hankhill69]

You'll have to bear in mind the price quoted may only be for a tiny amount - if you try to sell a large amount there may not be the demand.

Also on Cryptsy there is sometimes a large lag which could turn any potential profit in to a loss.

I hate cryptsy and I lost money due to that reason, could you please explain the concept of if I try to sell a large amount there wont be a demand for it? when i look at different buy, sell sheets for currencies people have huge amounts they are selling.

[btcrich]

I've done this as well.  I created a script almost a year ago that would find opportunities for arbitrage similar to yours.  This was for BTC-e however.  There could be good opportunities on Cryptsy however.

Oe thing to note however, the highest profitability will usually (always?) be better with triangular arbitrage.  Adding extra hops will detract from profits and would mean there are better opportunities you could be taking advantage of.  If I'm wrong, maybe you could explain how this method is better.

[hankhill69]

I've done this as well.  I created a script almost a year ago that would find opportunities for arbitrage similar to yours.  This was for BTC-e however.  There could be good opportunities on Cryptsy however.

Oe thing to note however, the highest profitability will usually (always?) be better with triangular arbitrage.  Adding extra hops will detract from profits and would mean there are better opportunities you could be taking advantage of.  If I'm wrong, maybe you could explain how this method is better.

Can you please explain the triangular arbitrage concept?