FAQ

Arbitrage is the simultaneous buying and selling of an asset on different markets to profit from the price difference between those markets. In a highly simplified example of how cryptocurrency arbitrage works, you would search for a specific coin that’s cheaper on Exchange A than on Exchange B. You then buy the coin on Exchange A, sell it for a higher price on Exchange B and pocket the difference.

For example, let’s assume the price of bitcoin is $60,000 on the Coinbase cryptocurrency exchange and $60,200 on Kraken. In this scenario, crypto arbitrageurs might spot this disparity and buy bitcoin on Coinbase and sell it on Kraken to pocket the $200 price difference. This is a typical example of a crypto arbitrage trade.

The first thing you need to be know is the pricing of assets on centralized exchanges depends on the most recent bid-ask matched order on the exchange order book. In other words, the most recent price at which a trader buys or sells a digital asset on an exchange is considered the real-time price of that asset on the exchange.

For instance, if the order to buy bitcoin for $60,000 is the most recently matched order on an exchange, this price becomes the latest price of bitcoin on the platform. The next matched order after this will also determine the next price of the digital asset. Therefore, price discovery on exchanges is a continuous process of stipulating the market price of a digital asset based on its most recent selling price.

Famously, in 2017 there was a moment when the price of Bitcoin on Kraken was $17,212, but only $16,979 on Bitstamp—presenting an arbitrage opportunity. In that instance, an investor could potentially make $233 per Bitcoin by buying them on Bitstamp, and then quickly selling them on Kraken.

Note that the price also tends to vary because investor demand for an asset is slightly different on each exchange.

We are updating our arbitrage data in every second and list them by gain percentage varies from 0.2 – 1000. If you focus on around ten such spreads every day, you can make at least a thousand dollars per week. To perform crypto arbitrage, you need the right set of tools and knowledge. Without this, it is close to impossible to take advantage of the opportunity. There may be situations when the spread may be larger, which could provide a huge profit. If you are a day crypto trader, and there is not much market movement, you can always earn some profit from arbitrage. If you are persistent and quick to take action on profitable opportunities, you can earn a decent profit from arbitrage. The most common type of arbitrage that people perform is spatial arbitrage, where they purchase cryptocurrency from one exchange and sell to another. If you think that seeing is believing, you may watch this video . It's promoting another company but we don't care. We are far more better. But before dive in to Arbitrage investing. Please be aware about Risks and DYOR.

The process of capitalizing on market inefficiencies is entirely legal. In fact, crypto arbitrage is central to the overall uniformity of the crypto market. Whenever there are price differentials across multiple exchanges, the trading activities of crypto arbitrageurs will eventually cause the prices of the digital asset across exchanges to converge.

The most basic approach to cryptocurrency arbitrage is to do everything manually – monitor the markets for price differences and then place your trades and transfer funds accordingly. But the best answer is using Coin Arber. We track more than 50 exchanges and over hundred coins and update our data every second. We don't suggest to use bots, because of false coins and exchange differences.

Crypto arbitrage is time sensitive. As more traders capitalize on a particular arbitrage opportunity, the price disparity between the two exchanges tends to disappear. The transaction speed of the blockchain: Since you might have to execute cross-exchange transactions, the time it takes to validate such transitions on the blockchain could impact the efficacy of your arbitrage trading strategy. It takes around 15-20 minutes for major coins to confirm the transaction. If the market price drops within this time frame, then you may run a risk of generating less arbitrage. In that time, the market might have moved against you. The AML checks of exchanges: It is common for exchanges to undertake anti-money laundering (AML) checks whenever large sums are being moved by a trader. In some cases, such checks could last for weeks. Therefore, you ought to consider the propensity of crypto exchanges to impose extra checks at the point of withdrawal before going ahead with cross-exchange arbitrage trades. Offline exchange servers: It is not uncommon for crypto exchanges to experience outages (go offline.) In some cases, crypto exchanges may even limit the withdrawal and deposit of specific digital assets for one reason or the other. When this happens, the possibility of capitalizing on arbitrage opportunities instantly diminishes.

Remember that trading across two exchanges may incur withdrawal, deposit and trading fees. These fees may accumulate and eat into your profits. Using our original example as a case study, let us assume that the withdrawal fees of Coinbase, deposit fees of Kraken and the trading fees of Kraken add up to an extra 2%. The total cost of executing this trade is $45,000 + (2% * $45,000) = $45,900. In other words, the crypto arbitrage trader must have incurred a loss since the potential profit is only $200.

Since arbitrage traders have to deposit lots of funds on exchange wallets, they are susceptible to security risks associated with exchange hacks and exit scams. Exit scams occur when a company suddenly halts its operations and carts away with users’ funds. In light of this, it is advisable to carry out due diligence and stick to reputable crypto exchanges.

Some coins mimic other coins with their name / symbol and even with their logo. Be hundred percent sure about that you are buying and transferring the exact same coin. Such an example: FTT token on Lbank is not the FTT token on other exchanges. Moreover some coins such as BTT change its structure on the way. Price differences can e huge on different exchanges, because they didn't adapt their system to new coin yet. As Coin Arber we tag big differences suspicious and huge differences dangerous trade. Do not waste your money with false promises.

When engaging in crypto arbitrage, the first thing you should keep in mind is that you are trading in a very volatile market. Therefore, you should do whatever it takes to optimize the speed of your trades before your window of opportunity to make a profit closes. You can optimize speed by sticking to high liquidity exchanges that can match and execute your orders instantly. By contrast, trades on low-volume exchanges may take several minutes before they are matched. By then, the arbitrage opportunity may have expired.

Sometimes Exchanges decide to suspend deposits or withdraw a coin. That's happening because of the high volume of Arbitrage occurring  between two exchanges. Before you invest a coin be hundred percent sure that the exchanges which you chose are open to transfer and withdraw that coin. Generally every exchange has its own page for that purpose.  Some coins that you find in one. exchange may be maintenance mode in other exchanges.Always DYOR (Do your Own Research) before getting action.

Unlike day traders, crypto arbitrage traders do not have to predict the future prices of bitcoin nor enter trades that could take hours or days before they start generating profits.

By spotting arbitrage opportunities and capitalizing on them, traders base their decision on the expectation of generating fixed profit without necessarily analyzing market sentiments or relying on other predictive pricing strategies. Also, depending on the resources available to traders, it is possible to enter and exit an arbitrage trade in seconds or minutes.

However, this does not necessarily mean that crypto arbitrageurs are completely free from risks.

Do Your Own Research (DYOR) is regarded as one of the most important aspects of being a cryptocurrency investor. The term first became popular during a wave of ICO projects that flooded into the cryptocurrency space between 2016 and 2018. Many investors were left duped or out of pocket by a host of scams entering the market as potential get-rich-quick crowdfunding schemes. As a way of combatting fraud, people were urged to ‘DYOR’ and investigate any potential investment fully before committing money to any project. The phrase has now permeated into popular culture, and is widely used to encourage amateur investors in any arena to navigate a minefield of misinformation. It is also often used as a kind of disclaimer by some cryptocurrency figures when they post about projects or analysis on social media platforms.

We collect information from different sources and evaluate them. Beside exchanges themselvs, We get data from Coin Market Cap, Coin Gecko, Nomics, Crypto Watch and some other listing sites.