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Author Topic: How to profit from crypto arbitrage trading  (Read 235 times)
its-a-me-mario
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November 14, 2019, 11:12:24 PM
Last edit: November 15, 2019, 12:53:42 AM by its-a-me-mario
Merited by Swordsoffreedom (1)
 #1

Hey everyone,

I've recently written an article about how arbitrage trading works and how to do it successfully with crypto. I'd love to hear your thoughts!

Article link: https://medium.com/coygo-blog/how-to-profit-from-crypto-arbitrage-trading-31b714842fb8

Disclaimer: In the post I mention how a product that I built (Coygo) can help w/finding arbitrage spreads
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November 15, 2019, 06:28:58 AM
 #2

yep, arbitrage is to transfer 1 asset / coin from the same exchanger. eTH coins from bittrex to binance. how to take profit? of course, with a significant price difference. but for me personally, not all coins can be done. My main choice is the speed of transaction delivery. even though an open deposit and withdrawal coin has a difference in price. but slow in the shipping process. I will not arbitrage. that's a big risk. experience a few weeks ago I arbitrage AEON from hitBTC to bittrex, the price difference is more than 5% but the transaction confirmation process is very slow that is more than 12 hours. so I did not continue. so before arbitrage please pay attention to this:
- deposit information
- withdrawal information
- transaction speed
- transaction fee
- open bid (sell and buy)
- alternative coins to return to the previous exchange.



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its-a-me-mario
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November 15, 2019, 06:06:49 PM
 #3

yep, arbitrage is to transfer 1 asset / coin from the same exchanger. eTH coins from bittrex to binance. how to take profit? of course, with a significant price difference. but for me personally, not all coins can be done. My main choice is the speed of transaction delivery. even though an open deposit and withdrawal coin has a difference in price. but slow in the shipping process. I will not arbitrage. that's a big risk. experience a few weeks ago I arbitrage AEON from hitBTC to bittrex, the price difference is more than 5% but the transaction confirmation process is very slow that is more than 12 hours. so I did not continue. so before arbitrage please pay attention to this:
- deposit information
- withdrawal information
- transaction speed
- transaction fee
- open bid (sell and buy)
- alternative coins to return to the previous exchange.

In the article I go over two approaches. One is to purchase a coin, transfer it to another exchange, then sell it. This is slow and risky since you can't guarantee the spread will still exist after the transfer. The other solution I describe is to hold balances on both exchanges and just submit accompanying buys/sells. This avoids the transfer time and cost issue, but obviously requires you to hold balances of both already.
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November 15, 2019, 08:44:09 PM
Last edit: November 15, 2019, 09:02:21 PM by Swordsoffreedom
 #4

When trying to sign up to Coygo, I get error 403. My country is not USA. I would love to try it and I am willing to provide some feedback to you.
Edit: nevermind, I received email and activated account, downloaded app and tried to install it. Immediately I got this warning:
Quote
Windows protected your PC
Windows Defender SmartScreen prevented an unrecognized app from starting. Running this app might put your PC at risk.

Is your app safe??

.WOLF.BET.▄███████████▄
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its-a-me-mario
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November 15, 2019, 10:19:14 PM
 #5

When trying to sign up to Coygo, I get error 403. My country is not USA. I would love to try it and I am willing to provide some feedback to you.
Edit: nevermind, I received email and activated account, downloaded app and tried to install it. Immediately I got this warning:
Quote
Windows protected your PC
Windows Defender SmartScreen prevented an unrecognized app from starting. Running this app might put your PC at risk.

Is your app safe??

Yes that is an unfortunate thing that happens because we're still new and not enough ppl have downloaded the app yet so Windows doesn't recognize it because it hasn't been installed on a ton of machines. All of our builds are signed w/valid Windows certificates. I've been working in fintech for years (previously worked at Intuit on the TurboTax product and surrounding infrastructure), and I left that job to pursue Coygo full-time. I know there isn't really much I can do to make you trust me but we're a US-based company, registered in Delaware operating out of California, and this is my LinkedIn if you'd like to do your homework on me https://www.linkedin.com/in/evan-francis/.
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November 16, 2019, 05:53:14 AM
 #6

yep, arbitrage is to transfer 1 asset / coin from the same exchanger. eTH coins from bittrex to binance. how to take profit? of course, with a significant price difference. but for me personally, not all coins can be done. My main choice is the speed of transaction delivery. even though an open deposit and withdrawal coin has a difference in price. but slow in the shipping process. I will not arbitrage. that's a big risk. experience a few weeks ago I arbitrage AEON from hitBTC to bittrex, the price difference is more than 5% but the transaction confirmation process is very slow that is more than 12 hours. so I did not continue. so before arbitrage please pay attention to this:
- deposit information
- withdrawal information
- transaction speed
- transaction fee
- open bid (sell and buy)
- alternative coins to return to the previous exchange.

In the article I go over two approaches. One is to purchase a coin, transfer it to another exchange, then sell it. This is slow and risky since you can't guarantee the spread will still exist after the transfer. The other solution I describe is to hold balances on both exchanges and just submit accompanying buys/sells. This avoids the transfer time and cost issue, but obviously requires you to hold balances of both already.
in the second option, if you have funds for both exchanges. to cut transaction time, I don't think you can. how do you conduct arbitrage, while you do not transfer to another exchange that has a higher price. if you don't make a coin transfer, I don't think you arbitrage. You only trade at prices that have not yet risen from other markets through your balance on two exchanges. example: BAT / BTC in market A is 100sat, while in market B it goes up to 125sat. but you have balances on both markets. and you buy at market A instantly and wait for it to pump like market B. well, basically it's the same as arbitrage. but it is not arbitrage.



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DAVID CHAUM's xx coin SALE IS NOW LIVE!

Sri rahayu
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November 16, 2019, 12:06:57 PM
 #7

This requires speed in transactions, if it is slow then the work will be in vain. By the way, after 2 years this product was made, you just launched it now? How many people have used your product?

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November 16, 2019, 01:39:10 PM
 #8

When trying to sign up to Coygo, I get error 403. My country is not USA. I would love to try it and I am willing to provide some feedback to you.
Edit: nevermind, I received email and activated account, downloaded app and tried to install it. Immediately I got this warning:
Quote
Windows protected your PC
Windows Defender SmartScreen prevented an unrecognized app from starting. Running this app might put your PC at risk.

Is your app safe??

I clicked Run anyway and then Avast antivirus started analysing the program. No problems found but then this showed up:



Looks like someone will manually check the file because it is still going on after few hours. I will patiently wait. Maybe this check will also help so that next time Avast will approve the file because it will be whitelisted.

.WOLF.BET.▄███████████▄
███████    ████████████▄
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November 16, 2019, 08:56:44 PM
 #9

When trying to sign up to Coygo, I get error 403. My country is not USA. I would love to try it and I am willing to provide some feedback to you.
Edit: nevermind, I received email and activated account, downloaded app and tried to install it. Immediately I got this warning:
Quote
Windows protected your PC
Windows Defender SmartScreen prevented an unrecognized app from starting. Running this app might put your PC at risk.

Is your app safe??

I clicked Run anyway and then Avast antivirus started analysing the program. No problems found but then this showed up:



Looks like someone will manually check the file because it is still going on after few hours. I will patiently wait. Maybe this check will also help so that next time Avast will approve the file because it will be whitelisted.

I suggest to install third party software, without source code to compile, in a virtual machine with the appropriate isolation from host OS.
Be careful installing apps in the same machine when you hold all your wallets!
But I'm sure al of you, already knows it.

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its-a-me-mario
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November 18, 2019, 03:31:12 AM
 #10

When trying to sign up to Coygo, I get error 403. My country is not USA. I would love to try it and I am willing to provide some feedback to you.
Edit: nevermind, I received email and activated account, downloaded app and tried to install it. Immediately I got this warning:
Quote
Windows protected your PC
Windows Defender SmartScreen prevented an unrecognized app from starting. Running this app might put your PC at risk.

Is your app safe??

I clicked Run anyway and then Avast antivirus started analysing the program. No problems found but then this showed up:



Looks like someone will manually check the file because it is still going on after few hours. I will patiently wait. Maybe this check will also help so that next time Avast will approve the file because it will be whitelisted.

That is the first time I've seen that, but as I mentioned we're still new and have a small number of users so it's actually possible you may be the first user to run it who has Avast on their machine. Thank you for the heads up.
its-a-me-mario
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November 18, 2019, 03:40:02 AM
 #11

This requires speed in transactions, if it is slow then the work will be in vain. By the way, after 2 years this product was made, you just launched it now? How many people have used your product?


We've been in a closed invite-only beta, by the end of the two years we had about 100 people signed up. We didn't do any marketing in the closed beta and weren't focusing on finding customers, we've been focused more on getting feedback from the people who were using it. In typical startup fashion we also pivoted a number of times, the product we have today doesn't at all resemble what we started with, and we actually changed companies in the process (needed to restructure as a C-Corp and we ran into a trademark issue with our previous name).

After our first week of being in open beta we're at 150 users registered, and daily active users ranging anywhere between 30-80. Those numbers will be increasing over the next couple of months as we focus more on marketing and keep the product free (for now) as feedback is more valuable to us than revenue atm.
its-a-me-mario
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November 18, 2019, 04:13:03 AM
Last edit: November 18, 2019, 04:48:34 AM by its-a-me-mario
 #12

yep, arbitrage is to transfer 1 asset / coin from the same exchanger. eTH coins from bittrex to binance. how to take profit? of course, with a significant price difference. but for me personally, not all coins can be done. My main choice is the speed of transaction delivery. even though an open deposit and withdrawal coin has a difference in price. but slow in the shipping process. I will not arbitrage. that's a big risk. experience a few weeks ago I arbitrage AEON from hitBTC to bittrex, the price difference is more than 5% but the transaction confirmation process is very slow that is more than 12 hours. so I did not continue. so before arbitrage please pay attention to this:
- deposit information
- withdrawal information
- transaction speed
- transaction fee
- open bid (sell and buy)
- alternative coins to return to the previous exchange.

In the article I go over two approaches. One is to purchase a coin, transfer it to another exchange, then sell it. This is slow and risky since you can't guarantee the spread will still exist after the transfer. The other solution I describe is to hold balances on both exchanges and just submit accompanying buys/sells. This avoids the transfer time and cost issue, but obviously requires you to hold balances of both already.
in the second option, if you have funds for both exchanges. to cut transaction time, I don't think you can. how do you conduct arbitrage, while you do not transfer to another exchange that has a higher price. if you don't make a coin transfer, I don't think you arbitrage. You only trade at prices that have not yet risen from other markets through your balance on two exchanges. example: BAT / BTC in market A is 100sat, while in market B it goes up to 125sat. but you have balances on both markets. and you buy at market A instantly and wait for it to pump like market B. well, basically it's the same as arbitrage. but it is not arbitrage.

Alright I will go over a scenario here that explains how arbitrage works without transferring between exchanges. To make it simple let's assume a pretty large spread, so it makes it easier to reason about and see the impact.

-----------------
Starting state
Exchange A:
  BTC-USDC rate: 7,050
  balances:
     50,000 USDC
Exchange B:
   BTC-USDC rate: 8,000
   balances:
      5 BTC
Total portfolio:
   50,000 USDC
   5 BTC
------------------
Placing trades
Exchange A:
  buy 4 BTC with 28,200 USDC (7,050 * 4)
  balances:
    4 BTC
    21,800 USDC (50,000 starting - 28,200 traded)
Exchange B:
  sell 4 BTC for 32,000 USDC (8,000 * 4)
  balances:
    1 BTC (5 starting - 4 traded)
    32,000 USDC
Total portfolio:
   53,800 USDC (21,800 + 32,000)
   5 BTC
------------------
Ending state
Total portfolio:
   53,800 USDC (21,800 on Exchange A+ 32,000 on Exchange B)
   5 BTC (4 on Exchange A + 1 on Exchange B)

You started with 50,000 USDC and 5 BTC. You now have 53,800 USDC and 5 BTC. You've accumulated more USDC without losing any BTC by exploiting the arbitrage spread of BTC-USDC 7,050 on Exchange A and 8,000 on Exchange B.
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November 18, 2019, 05:45:00 AM
 #13

Its very difficult to make any money from crypto arbitrage these days. Its mostly done by high tech bots using API. I actually was able to do arbitage back in 2015-2016 succesfuly and basically even had success by sending back and forth between exchanges.

From what I recall there was only a handful of exchanges, I remember that Poloniex, Mintpal, and Crypsty were among the biggest back in the day. I would basically scan the quotes and if there was a >2% spread, I would buy the alt on one exchange with BTC, and immediately do a withdraw and usually it would arrive in less than 5 mins at the other exchange and confirm. Volumes were smaller back then and it was possible. However sometimes I just held the alts on various exchanges and did an instantaneous arbitrage however the danger in holding the alts was that they lost value quickly.  These days you can't do that anymore.

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November 18, 2019, 09:55:08 AM
Merited by The Pharmacist (2)
 #14

The problem I have with arbitrage strategy is that possibility of spotting an opportunity on major exchanges are low since their spreads are way faster. A friend of mine who has been obsessed with profitting off arbitration recently lost 5 ETH. How? He saw an exchange that offered Ethereum and BTC at a slightly higher price. I mean, The exchange had everything - more exchange look and feel, 2FA - everything and banking $10 on every ETH seemed like a good deal.

Another issue with arbitrage is the tx fees that goes along with it.



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November 18, 2019, 02:04:22 PM
 #15

The problem I have with arbitrage strategy is that possibility of spotting an opportunity on major exchanges are low since their spreads are way faster. A friend of mine who has been obsessed with profitting off arbitration recently lost 5 ETH. How? He saw an exchange that offered Ethereum and BTC at a slightly higher price. I mean, The exchange had everything - more exchange look and feel, 2FA - everything and banking $10 on every ETH seemed like a good deal.

Another issue with arbitrage is the tx fees that goes along with it.
Yes, arbitraging is too risky, yes trading is already risky but arbitrage is more. Sometimes there will be delays in transferring your assets or your coins to the other exchange due to the congestion , sometimes it is not yet confirmed in the other exchange the price of the coin already dumps, the prices of each coin is not differs too much, it is a little differences in each exchanges. Fees are also one of the problem, you need to pay that and it will deduct to your coin.

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November 18, 2019, 04:03:31 PM
 #16

It was much easier to profit from arbitrage back in 2016 than it is today. There are multiple sites which offer bots to do it and also some sites which tools (Newscrypto arbitrage tool).
Exchange liquidity is a factor which isn't covered enough in this article and is very important.

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November 18, 2019, 04:26:21 PM
 #17

The problem I have with arbitrage strategy is that possibility of spotting an opportunity on major exchanges are low since their spreads are way faster. A friend of mine who has been obsessed with profitting off arbitration recently lost 5 ETH. How? He saw an exchange that offered Ethereum and BTC at a slightly higher price. I mean, The exchange had everything - more exchange look and feel, 2FA - everything and banking $10 on every ETH seemed like a good deal.

Another issue with arbitrage is the tx fees that goes along with it.

Well, transaction fees are another factor when doing arbitrage, you have to trade huge volumes in order to have a good profit. Sometimes higher price value is deceiving, and be aware to trade only on known exchanges. Another factor to consider is the time to receive your token to another site because sometimes trading is suspended to that site, the volume is low, and delay in transferring coins.

 
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November 18, 2019, 05:53:50 PM
 #18

The problem I have with arbitrage strategy is that possibility of spotting an opportunity on major exchanges are low since their spreads are way faster. A friend of mine who has been obsessed with profitting off arbitration recently lost 5 ETH. How? He saw an exchange that offered Ethereum and BTC at a slightly higher price. I mean, The exchange had everything - more exchange look and feel, 2FA - everything and banking $10 on every ETH seemed like a good deal.

Another issue with arbitrage is the tx fees that goes along with it.
Yes, arbitraging is too risky, yes trading is already risky but arbitrage is more. Sometimes there will be delays in transferring your assets or your coins to the other exchange due to the congestion , sometimes it is not yet confirmed in the other exchange the price of the coin already dumps, the prices of each coin is not differs too much, it is a little differences in each exchanges. Fees are also one of the problem, you need to pay that and it will deduct to your coin.

I suggest you see my post above describing an example of how to preform arbitrage trading without transferring between exchanges. This is really the only way I would recommend most ppl to do it. It avoids transaction times and fees and makes it much easier to get a quick guaranteed profit.
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November 18, 2019, 06:52:17 PM
 #19

do that on CEX exchange, is totally hard on nowdays.
buy some token on DEX exchange and sell them on CEX , its a trend for now .
well, probably u need wait for 2-3 days to get your target. but the profit is more better , rather than high speed transaction between CEX to CEX .
or the better ,
if u find some tokens moved their smart contract to another platfrom is a good target.
for example , about PGL token .
they move their smartcontract from ETH to EOS blockchain, and the good news , just a few people knowing it.
buy the old PGL from exchange , then swap it to new PGL and sell it quickly on EOS DEX.
on that time i got whales profit  Grin Grin Grin Grin
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November 18, 2019, 07:04:15 PM
 #20

do that on CEX exchange, is totally hard on nowdays.
buy some token on DEX exchange and sell them on CEX , its a trend for now .
well, probably u need wait for 2-3 days to get your target. but the profit is more better , rather than high speed transaction between CEX to CEX .
or the better ,
if u find some tokens moved their smart contract to another platfrom is a good target.
for example , about PGL token .
they move their smartcontract from ETH to EOS blockchain, and the good news , just a few people knowing it.
buy the old PGL from exchange , then swap it to new PGL and sell it quickly on EOS DEX.
on that time i got whales profit  Grin Grin Grin Grin

On the topic of using a DEX, if you haven't taken a look yet Totle makes getting the best price on DEXs easy. They have a smart order router that can split your order up into orders across multiple DEXs to ensure you get the best price, this helps solve the issue of low liquidity on single DEXs. I've met with their team a few times, they're good ppl and they have a solid product. They have an API, or if you wanna use it as a consumer they have an app that exposes the API here https://swap.totle.com/

I haven't explored using DEXs for arbitrage yet but it's an interesting idea.
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