Cryptocurrency arbitrage trading means buying coins low and selling high.
The prices of crypto coins on trading Exchanges vary over time. Prices also vary between different Exchanges at the same time.
Crypto arbitrage is buying coins at an Exchange at a relatively low price and selling those coins on a different exchange with a higher price. The difference between the buy and the sell prices is the spread.
For example, if Bitcoins are being sold for $9,000 on Binance and $9,200 on Bittrex, you could buy a coin at Binance, sell it at Bittrex and make $200.
In a moment we'll look at a unique tool you can use to find crypto arbitrage opportunities.
But first lets look closer at cryptocurrency arbitrage.
The biggest advantage of crypto arbitrage is that it doesn't care about the price volatility of the crypto coins. The only thing that matters is the difference in exchange prices at the time of the transaction.
The cryptocurrency market is inefficient. That means:
1) Availability, anonymity, regulations, and security vary.
2) There is a lack of agreement on the value of individual cryptocurrencies.
3) Price information doesn't flow instantly - there are hundreds of exchanges spread around the globe in different time zones.
4) Transfer and transaction times vary with demand.
5) There are many opportunities for arbitrage trading.
Potential arbitrage trades should be based on NET profits - don't forget to subtract exchange fees and transaction fees from the spread.
Or, use a decentralized exchange (DEX) and a crypto wallet to minimize trading fees and transfer times.
Arbitrage challenges include:
1) short opportunity windows, as small as seconds or less
2) small price differentials means you need to perform more trades
3) difficulty in buying and selling simultaneously across two or more exchanges
4) calculation of transaction costs can be difficult and time-consuming
5) transfer and settlement speeds can interfere with getting expected prices
6) competing with other traders and bots before spread opportunities disappear
Are you serious yet? Then time to look at arbitrage tracking tools, bots and trading algorithms. Benefits include:
1) finding and tracking arbitrage opportunities
2) faster executions
3) less chance of error
4) takes emotion out of the picture
There are several tools available for finding crypto arbitrage opportunities.
Bitsgap is integrated with more than 25 crypto exchanges and looks for arbitrage opportunities based on your crypto balance.
Bitsgap calculates potential profits for each opportunity, automatically accounting for exchange fees.
In the next video we'll look at cryptocurrency wallets.
If you like this video please subscribe to my channel.
For related information please check out these videos:
Cryptocurrency Basics In America: https://youtu.be/KGRlHWOSx6g
Cryptocurrency Blockchain In America: https://youtu.be/dVQeAFM62xA
Cryptocurrency Education In America: https://youtu.be/rMiy0ZGnuQY
Cryptocurrency Exchanges In America: https://youtu.be/KjUkkZEaPFU
Cryptocurrency Smarter Contracts In America: https://youtu.be/bXw_SvDxhV4
Cryptocurrency Price Scenarios In America: https://youtu.be/xuMEaYVUQ8s
Cryptocurrency Reliable News Sources In America: https://youtu.be/bODHWtSeQW0
Cryptocurrency Digital Coin Wallets In America: https://youtu.be/r9aWj7SiN2s
Cryptocurrency Notorious Scams In America: https://youtu.be/mkAm_dMsLVw