cryptocurrency arbitrage network for good

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The main takeaway from the article: Brady plans every detail of his life so he can play football as long as possible, and he'll do anything he can to get an edge. He diets all year round, takes scheduled naps in the offseason, never misses a workout, eats what his teammates call "birdseed," and does cognitive exercises to keep his brain sharp. Brady struggles to unwind after games and practices. He's still processing, thinking about what's next.

Cryptocurrency arbitrage network for good binary options tick charts futures

Cryptocurrency arbitrage network for good

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COLLEGE BETTING LINE FOOTBALL

If there is a mispricing in the price of the token then you will bag the spread the moment that you do this. For example, assume that Ripple XRP is trading for 0. There now exists an immediate opportunity for arbitrage by buying the coin at 0. The concept of triangular arbitrage is most commonly associated with price differences in forex markets.

It involves an arbitrage where three different currencies are used. The mispricing exists between the relative prices of the forex pairs. This can also exist in a large way in cryptocurrency assets that are priced in other currencies. For example, the Kimchi premium is a well-known market phenomenon that exists between the price of Bitcoin in USD on a US exchange, vs.

Here is a graphical example with pricing at time of publishing. In fact, the Kimchi premium has been so high in the past that CoinMarketCap even removed the Korean exchange pricing from their aggregate charts given the distortion that it had. The mispricing happens on a number of different exchanges that are servicing local markets.

Well, there are a number of things that you have to consider such as fees, exchange controls and free movement of capital. We will touch on that briefly later on. While Fiat triangular arbitrage is the most profitable, there also exists the opportunity to make a triangular arb profit on the mispricing between three pairs of different coins. This mispricing can even occur on the same exchange.

Let us take a look at an example of what I am talking about. Below is the mispricing that we have between the pricing of Ethereum , Litecoin and Bitcoin on a single exchange. The trader is able to make this triangular crypto arbitrage and increase the size of his Bitcoin pie. This mispricing is quite unlikely to happen now but it is well known that there was a great deal of it in the bull run. In fact, a developer even designed a trading bot that would take advantage of the mispricings the moment that they happened.

This is another discipline that is borrowed from trading the traditional financial markets. It is the notion that there is an asset that is overvalued on a certain exchange but undervalued on the other. The hope of the trader in this situation is that the law of no arbitrage implies that the price of the assets is likely to converge at some point in the future.

You will buy the coin where it is undervalued on the exchange and you will short sell it on the other exchange where it is overvalued. Hence, in order for you to complete a convergence crypto reverse arbitrage, you should have access to an exchange that will allow you to short sell the crypto asset. Clearly, there is an arbitrage opportunity here. This is an arbitrage strategy that tries to take advantage of mispricing between assets in the futures and the physical markets.

It is something that is now open to Bitcoin given that futures contracts were launched last year. The strategy is essentially a market neutral strategy that involves taking a long position in the physical markets and then a short position in the futures market with the hope that you can make a profit on a certain mispricing. On expiry of the futures contract, you will settle the futures position with your long position in the asset.

The hope is that on the delivery of the asset, you can make a profit by delivering the asset and pocketing the difference minus any carrying costs. For example, let us take a look at an example of a potential arbitrage opportunity. So clearly, there is an arbitrage opportunity here.

In more technical speak, the Forward Curve for Bitcoin is upward facing. You will then take advantage of this by buying Bitcoin and holding it to the expiration of the contract. Below is a helpful image. Of course, in traditional financial markets there could be other costs that are associated with it that could reduce your gains.

However, when holding a digital asset, there are no real carrying costs to be concerned about. All one need do is store those in their wallets and wait until expiration. There are a number of factors that can drive the mispricing in cryptocurrency markets. Asset mispricing will occur in markets that are less developed and hence less effecient than traditional markets. In traditional financial markets, there are high frequency trading hedge funds that take up tiny opportunities in a relatively short period of time and ensure that these markets are kept efficient.

These still do not exist to the same extent in cryptocurrency markets. This is why triangular arbitrage even on a single exchange can exist between simple pairs. Some countries have exchange control in place that makes it hard to simply wire out large quantities of money.

In the case of the Bitcoin futures arbitrage, the fact that they are cash settled is no doubt a large factor in why there is a mispricing. He stated that. Slippage is a term that is used in financial markets to refer to the difference between the price that was expected for the trade versus the price that you actually got. Like spatial arbitrage, cross-border arbitrage involves selling the asset in different locations. But specifically in different countries across borders where there may be a price difference.

Triangular arbitrage usually refers to an arbitrage opportunity that involves price variations at three exchanges for foreign currencies. Many investors, traders, and economists believe in the efficient-market hypothesis. This is a hypothesis that at any given point in time the market prices of assets are accurately reflecting all available information.

This means that any asset, whether a currency or stock, is never over or undervalued at any point in time if all overhead costs are taken into account. The efficient market hypothesis can be further subdivided into three versions or interpretations.

All asset prices are a perfect reflection of both public and private information. There is no way to beat the market via strategy. Only being lucky can produce above-average returns as this version of the theory predicts that there is a normal distribution of returns for investors. This is ironically and arguably the weakest form of the hypothesis.

Even without new and important information being widely disseminated into the market. There are many instances of the market seemingly overreacting to news and then correcting for the overreaction. This is due to the fact that information takes time to propagate in any system or network like a market.

Traders need to eat and sleep and certain markets only trade during certain hours. So it seems rather doubtful that the strong form is accurate. The semi-strong form is similar to the strong form. But it is limited to all public information rather than all the information available. It also gives more wiggle room and time for information propagation.

Although prices do adjust very rapidly to information. This version suggests that neither of the most common trading strategies fundamental and technical analysis will give investors or traders any advantage in the market. Essentially, the only way to get an advantage is to have insider knowledge. The weak form says that asset prices are random and not influenced by the prices in the past. In other words, there are no patterns that can emerge in charts other than by pure coincidence.

The weak form has no room for the idea of price momentum which says that previous price movements affect future prices. Although it does allow room for some fundamental analysis to allow investors to potentially beat the market and make wise investment decisions. In the context of arbitrage, it would seem that the semi-strong form of the efficient market hypothesis is probably the more accurate version.

It is believed that arbitrage is generally good as it makes the market more efficient. Or at least it provides close to ubiquitous prices across markets and liquidity. The Law of One Price says that identical goods sold in any location should be the same price if you control for the costs of overhead like transportation. Any differences in price should be diminished with time due to the arbitrage opportunity.

Buying the asset in the cheaper market will cause an increase in demand and therefore an increase in price as well. Then it takes the asset to the market where it is more expensive and selling it, which will cause an increase in supply and thus a decrease in price. Doing this repeatedly will cause the prices in both markets to converge to roughly the same. Or at least eliminate the profit taking opportunities. And so the market enters a state called the arbitrage-free or no-arbitrage condition.

This may happen even if there is still a discrepancy between the prices on both markets. Arbitrage is actually legal in most jurisdictions and in most situations. This is despite the negative connotations the word might have in popular culture. Market makers are generally encouraged in most free markets as they help to provide liquidity in by increasing overall transaction volume. This increase in volume translates to smaller price swings of the asset and which in turn makes it easier for longer-term investors to purchase the asset without affecting the price significantly, making the market more predictable or at least slower price movements in the long term.

Low liquidity is one of the biggest issues with the cryptocurrency market in general, which we could then arguably infer that this translates to lots of opportunity for arbitrage. Arbitrage is probably as old as trade itself. There is some evidence of arbitrage in the middle east in ancient times.

Spatial or geographic arbitrage with merchant networks was common. Th ey often traveled long distances to many locations with varying local currencies. These merchants would often share information about prices of goods in different locations, which helped them to identify good arbitrage opportunities along the trade routes. In the Mediterranean around BC , there was an increase in arbitrage opportunities among money changers due to Persia using a bimetallic coinage system.

This system offset the value of silver relative to gold causing an increase in exports to Greece and arbitrage activity. Much like the Efficient Market Hypothesis itself, there are multiple camps to the idea of arbitrage which are extensions of the EMH. The first camp is weak no-arbitrage, which says that arbitrage is rare but not impossible. Generally, opportunities can be found where there is low liquidity in an asset or market. The second camp is strong no-arbitrage, which says that under no circumstances is arbitrage actually possible.

If you were to try a strategy enough times, you would find its no more profitable than random buying and selling of an asset. This view of arbitrage is consistent with the efficient market hypothesis. It also assumes markets are always perfectly efficient. Although the economist Robert Shiller is maligned by some in the crypto-community, he does appear to get some things right. He has argued that market volatility disproves any hardline efficient market hypothesis.

In essence, people are too irrational and there are too many dynamic factors at play in markets for them to be truly efficient. In the brief history of cryptocurrency, there have been periods of time which produced cross border arbitrage opportunities. But this might be caused by the friction and crypto bans Indian banks have put on cryptocurrency. The study identifies two main causes of the premium; capital controls and friction caused by the Bitcoin network itself transaction speed and fees.

This type of arbitrage is likely a lot more difficult to exploit. It would come down to knowing the more intricate details of the financial system in your area. With that said, the study concluded that cryptocurrency arbitrage is not likely possible. At least arbitrage on the Kimchi premium:. If one of the other crypto currencies had no premium or a lower premium than Bitcoin arbitrageurs could use that currency to move funds out of Korea and complete the arbitrage.

Despite this, there are plenty of traders in all kinds of markets who claim to make a profit out of arbitrage strategies. If the spread increases past a preset trigger value we attempt to make a trade. The trigger value should be some specific number, ideally derived from some kind of risk analysis that takes into account market volatility, exchange fees, past trade attempts, etc. Most arbitrage strategies require holding sums of both assets on both markets and simultaneously buying and selling respectively.

The reasoning here is that it is a risk-free trade because it happens nearly instantly. However in the case of cryptocurrency, you can argue that this would not be risk-free. This is because cryptocurrencies are so volatile.

Holding them indefinitely during trading time waiting for arbitrage opportunities could offset trading profits by a substantial margin. So in outlining our strategy here, we will use more of the typical spatial arbitrage. This involves actually sending the asset from one market to another. With the information here you could adapt it to be one of the other types of strategies to your liking. It will be logistically unlikely that you will be able to have a very profitable trading strategy of any kind without writing some scripts or bots.

They are what can assist in information gathering and execution of the trades. This is especially true with arbitrage since you need to make the trades as fast as possible. So if you are serious about it, it is advisable to learn how to program or use advanced pre-made trading software. Aside from the normal arbitrage conditions stated earlier, with cryptocurrency trading , we will need an additional set of criteria and heuristics.

One of the most common sources for price data is CoinMarketCap. It is one of the first exchange prices aggregating websites in crypto and has over crypto assets listed. However, the free version has limited functionality. Lucky for us, it has well-maintained API wrappers in several languages. Or to follow along, you can go to coinmarketcap. It should look something like this. Here is a short script containing only 3 functions that use the Coingecko API. What it does is essentially the same thing that we would have to do manually if we were searching for arbitrage opportunities in the markets.

It checks all the markets for a given coin or token.

SUPER BOWL BETTING TOPICS FOR DISCUSSION

Due to latency and lag, most of the time the latest price of an exchange is not so up to date which creates another arbitrage opportunity. Arbitrage is all about locating price differences across multiple exchanges. Therefore, having access to more exchanges at once not only give you a better chance of finding price mismatches and doing profit on them, but also mitigates the liquidity risk of cryptocurrency.

Looking for a tool that could help me reach the biggest number of exchanges at once, I stumbled upon Bitbengrab , a UK-based company formed by a team of expert traders and programmers. Bitbengrab allows traders to connect to 29 exchanges at once. Exchanges like Binance, Bittrex, Bitfinex are supported. The platform uses its libraries to fetch realtime data such as prices and order books, and then tries to find price differences between multiple market pairs and exchanges.

Everything happens automatically. The platform only needs your exchange API key. The permissions required are for viewing your balance and executing trades. No withdrawal or deposit permissions are required so your funds will always remain with the exchange.

The platform was launched not a long time ago and it needs to make a name for itself first, but it has a great start and a green status. Arbitrage is not only repetitive, but you will be able to make a profit only by buying and selling on exchanges almost at the same time. Doing this task manually is nearly impossible. If you are tech-savvy you might want to host your own software as your money-making machine. Buying and selling activities are done on two different exchanges independently but simultaneously.

Bitcoin is the only supported asset and the strategy is always market-neutral, never being influenced by the actual price movements of BTC. Exchange arbitrage is a simple, straightforward strategy that could bring you consistent, daily profits, and using a platform like Bitbengrab should be enough for you to take advantage of most of the opportunities that arise across the cryptocurrency markets.

Anyway, if you are an experienced trader you might want to combine it with other trading strategies to maximize your profits. Exploring automated trading platforms that could give you enough freedom to program your own objectives, Cryptohopper seems to cover the essential requirements.

The online platform allows you to set up a semi-automated bot that can execute trades on your behalf. Be aware that the bot we are talking about is only as good as the person that programs it. If the platforms mentioned above are automatically looking for arbitrage opportunities and executing them for marginal profits, The bot only follows the underlying conditions set at initialization.

Currently, the platform supports 11 exchanges including Bittrex, Poloniex, Binance. Not the optimal range for arbitrage but, given the fact that these are some of the largest exchanges in the space, there are plenty of opportunities to act on. Cryptohopper is a subscription-based service and the exchange arbitrage feature is only available for the pro subscription.

Using it only for generating steady profits from it might not be realistic as your earning should first break-even on the payment fee before being transformed into profits. Choosing a trading platform is not as easy as going with the most popular choice. All the solutions listed above have the potential to produce passive income for you on a daily basis. They all have the ability to follow the arbitrage trading strategy.

They are all accessing multiple exchanges at once, picking on those opportunities that appear every day. If arbitrage trading was profitable way before cryptocurrency was invented, you might find out that an open market such as the cryptocurrency market has introduced even more chances for you to cash in on price mismatches.

All asset prices are a perfect reflection of both public and private information. There is no way to beat the market via strategy. Only being lucky can produce above-average returns as this version of the theory predicts that there is a normal distribution of returns for investors. This is ironically and arguably the weakest form of the hypothesis. Even without new and important information being widely disseminated into the market.

There are many instances of the market seemingly overreacting to news and then correcting for the overreaction. This is due to the fact that information takes time to propagate in any system or network like a market. Traders need to eat and sleep and certain markets only trade during certain hours. So it seems rather doubtful that the strong form is accurate. The semi-strong form is similar to the strong form. But it is limited to all public information rather than all the information available.

It also gives more wiggle room and time for information propagation. Although prices do adjust very rapidly to information. This version suggests that neither of the most common trading strategies fundamental and technical analysis will give investors or traders any advantage in the market. Essentially, the only way to get an advantage is to have insider knowledge. The weak form says that asset prices are random and not influenced by the prices in the past.

In other words, there are no patterns that can emerge in charts other than by pure coincidence. The weak form has no room for the idea of price momentum which says that previous price movements affect future prices. Although it does allow room for some fundamental analysis to allow investors to potentially beat the market and make wise investment decisions. In the context of arbitrage, it would seem that the semi-strong form of the efficient market hypothesis is probably the more accurate version.

It is believed that arbitrage is generally good as it makes the market more efficient. Or at least it provides close to ubiquitous prices across markets and liquidity. The Law of One Price says that identical goods sold in any location should be the same price if you control for the costs of overhead like transportation. Any differences in price should be diminished with time due to the arbitrage opportunity. Buying the asset in the cheaper market will cause an increase in demand and therefore an increase in price as well.

Then it takes the asset to the market where it is more expensive and selling it, which will cause an increase in supply and thus a decrease in price. Doing this repeatedly will cause the prices in both markets to converge to roughly the same. Or at least eliminate the profit taking opportunities. And so the market enters a state called the arbitrage-free or no-arbitrage condition.

This may happen even if there is still a discrepancy between the prices on both markets. Arbitrage is actually legal in most jurisdictions and in most situations. This is despite the negative connotations the word might have in popular culture. Market makers are generally encouraged in most free markets as they help to provide liquidity in by increasing overall transaction volume.

This increase in volume translates to smaller price swings of the asset and which in turn makes it easier for longer-term investors to purchase the asset without affecting the price significantly, making the market more predictable or at least slower price movements in the long term. Low liquidity is one of the biggest issues with the cryptocurrency market in general, which we could then arguably infer that this translates to lots of opportunity for arbitrage.

Arbitrage is probably as old as trade itself. There is some evidence of arbitrage in the middle east in ancient times. Spatial or geographic arbitrage with merchant networks was common. Th ey often traveled long distances to many locations with varying local currencies. These merchants would often share information about prices of goods in different locations, which helped them to identify good arbitrage opportunities along the trade routes.

In the Mediterranean around BC , there was an increase in arbitrage opportunities among money changers due to Persia using a bimetallic coinage system. This system offset the value of silver relative to gold causing an increase in exports to Greece and arbitrage activity.

Much like the Efficient Market Hypothesis itself, there are multiple camps to the idea of arbitrage which are extensions of the EMH. The first camp is weak no-arbitrage, which says that arbitrage is rare but not impossible. Generally, opportunities can be found where there is low liquidity in an asset or market.

The second camp is strong no-arbitrage, which says that under no circumstances is arbitrage actually possible. If you were to try a strategy enough times, you would find its no more profitable than random buying and selling of an asset. This view of arbitrage is consistent with the efficient market hypothesis.

It also assumes markets are always perfectly efficient. Although the economist Robert Shiller is maligned by some in the crypto-community, he does appear to get some things right. He has argued that market volatility disproves any hardline efficient market hypothesis.

In essence, people are too irrational and there are too many dynamic factors at play in markets for them to be truly efficient. In the brief history of cryptocurrency, there have been periods of time which produced cross border arbitrage opportunities. But this might be caused by the friction and crypto bans Indian banks have put on cryptocurrency. The study identifies two main causes of the premium; capital controls and friction caused by the Bitcoin network itself transaction speed and fees.

This type of arbitrage is likely a lot more difficult to exploit. It would come down to knowing the more intricate details of the financial system in your area. With that said, the study concluded that cryptocurrency arbitrage is not likely possible. At least arbitrage on the Kimchi premium:. If one of the other crypto currencies had no premium or a lower premium than Bitcoin arbitrageurs could use that currency to move funds out of Korea and complete the arbitrage.

Despite this, there are plenty of traders in all kinds of markets who claim to make a profit out of arbitrage strategies. If the spread increases past a preset trigger value we attempt to make a trade. The trigger value should be some specific number, ideally derived from some kind of risk analysis that takes into account market volatility, exchange fees, past trade attempts, etc.

Most arbitrage strategies require holding sums of both assets on both markets and simultaneously buying and selling respectively. The reasoning here is that it is a risk-free trade because it happens nearly instantly. However in the case of cryptocurrency, you can argue that this would not be risk-free. This is because cryptocurrencies are so volatile. Holding them indefinitely during trading time waiting for arbitrage opportunities could offset trading profits by a substantial margin.

So in outlining our strategy here, we will use more of the typical spatial arbitrage. This involves actually sending the asset from one market to another. With the information here you could adapt it to be one of the other types of strategies to your liking. It will be logistically unlikely that you will be able to have a very profitable trading strategy of any kind without writing some scripts or bots. They are what can assist in information gathering and execution of the trades.

This is especially true with arbitrage since you need to make the trades as fast as possible. So if you are serious about it, it is advisable to learn how to program or use advanced pre-made trading software. Aside from the normal arbitrage conditions stated earlier, with cryptocurrency trading , we will need an additional set of criteria and heuristics.

One of the most common sources for price data is CoinMarketCap. It is one of the first exchange prices aggregating websites in crypto and has over crypto assets listed. However, the free version has limited functionality. Lucky for us, it has well-maintained API wrappers in several languages.

Or to follow along, you can go to coinmarketcap. It should look something like this. Here is a short script containing only 3 functions that use the Coingecko API. What it does is essentially the same thing that we would have to do manually if we were searching for arbitrage opportunities in the markets. It checks all the markets for a given coin or token. Next, it takes the highest price and lowest price, finds the absolute difference, and returns that as a percentage.

The bigger the spread the more profit potential because the spread is your profit minus trading and transaction fees. Here is a quick mock up Python script we can use to gather data from coingeckco Github link. So we will have to manually check these pairs. No way! This may explain why there was such a large spread.

And also why no one had exploited this opportunity already.

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Free online bots can help synthesize fluctuations in value. In short it is an online magnificent robot tool that queries major crypto exchanges in real time and finds arbitrage opportunities according to your desired minimum percentage. Vote : 8. Binance Coin. Bitcoin Cash. USD Coin.

Wrapped Bitcoin. Bitcoin SV. Synthetix Network Token. Theta Network. Huobi Token. Celsius Network. FTX Token. Binance USD. LEO Token. The Graph. Ethereum Classic. Huobi BTC. In the context of arbitrage, it would seem that the semi-strong form of the efficient market hypothesis is probably the more accurate version. It is believed that arbitrage is generally good as it makes the market more efficient.

Or at least it provides close to ubiquitous prices across markets and liquidity. The Law of One Price says that identical goods sold in any location should be the same price if you control for the costs of overhead like transportation. Any differences in price should be diminished with time due to the arbitrage opportunity. Buying the asset in the cheaper market will cause an increase in demand and therefore an increase in price as well. Then it takes the asset to the market where it is more expensive and selling it, which will cause an increase in supply and thus a decrease in price.

Doing this repeatedly will cause the prices in both markets to converge to roughly the same. Or at least eliminate the profit taking opportunities. And so the market enters a state called the arbitrage-free or no-arbitrage condition.

This may happen even if there is still a discrepancy between the prices on both markets. Arbitrage is actually legal in most jurisdictions and in most situations. This is despite the negative connotations the word might have in popular culture. Market makers are generally encouraged in most free markets as they help to provide liquidity in by increasing overall transaction volume.

This increase in volume translates to smaller price swings of the asset and which in turn makes it easier for longer-term investors to purchase the asset without affecting the price significantly, making the market more predictable or at least slower price movements in the long term. Low liquidity is one of the biggest issues with the cryptocurrency market in general, which we could then arguably infer that this translates to lots of opportunity for arbitrage.

Arbitrage is probably as old as trade itself. There is some evidence of arbitrage in the middle east in ancient times. Spatial or geographic arbitrage with merchant networks was common. Th ey often traveled long distances to many locations with varying local currencies. These merchants would often share information about prices of goods in different locations, which helped them to identify good arbitrage opportunities along the trade routes.

In the Mediterranean around BC , there was an increase in arbitrage opportunities among money changers due to Persia using a bimetallic coinage system. This system offset the value of silver relative to gold causing an increase in exports to Greece and arbitrage activity. Much like the Efficient Market Hypothesis itself, there are multiple camps to the idea of arbitrage which are extensions of the EMH.

The first camp is weak no-arbitrage, which says that arbitrage is rare but not impossible. Generally, opportunities can be found where there is low liquidity in an asset or market. The second camp is strong no-arbitrage, which says that under no circumstances is arbitrage actually possible. If you were to try a strategy enough times, you would find its no more profitable than random buying and selling of an asset.

This view of arbitrage is consistent with the efficient market hypothesis. It also assumes markets are always perfectly efficient. Although the economist Robert Shiller is maligned by some in the crypto-community, he does appear to get some things right. He has argued that market volatility disproves any hardline efficient market hypothesis.

In essence, people are too irrational and there are too many dynamic factors at play in markets for them to be truly efficient. In the brief history of cryptocurrency, there have been periods of time which produced cross border arbitrage opportunities. But this might be caused by the friction and crypto bans Indian banks have put on cryptocurrency. The study identifies two main causes of the premium; capital controls and friction caused by the Bitcoin network itself transaction speed and fees.

This type of arbitrage is likely a lot more difficult to exploit. It would come down to knowing the more intricate details of the financial system in your area. With that said, the study concluded that cryptocurrency arbitrage is not likely possible.

At least arbitrage on the Kimchi premium:. If one of the other crypto currencies had no premium or a lower premium than Bitcoin arbitrageurs could use that currency to move funds out of Korea and complete the arbitrage. Despite this, there are plenty of traders in all kinds of markets who claim to make a profit out of arbitrage strategies.

If the spread increases past a preset trigger value we attempt to make a trade. The trigger value should be some specific number, ideally derived from some kind of risk analysis that takes into account market volatility, exchange fees, past trade attempts, etc. Most arbitrage strategies require holding sums of both assets on both markets and simultaneously buying and selling respectively. The reasoning here is that it is a risk-free trade because it happens nearly instantly.

However in the case of cryptocurrency, you can argue that this would not be risk-free. This is because cryptocurrencies are so volatile. Holding them indefinitely during trading time waiting for arbitrage opportunities could offset trading profits by a substantial margin. So in outlining our strategy here, we will use more of the typical spatial arbitrage. This involves actually sending the asset from one market to another. With the information here you could adapt it to be one of the other types of strategies to your liking.

It will be logistically unlikely that you will be able to have a very profitable trading strategy of any kind without writing some scripts or bots. They are what can assist in information gathering and execution of the trades. This is especially true with arbitrage since you need to make the trades as fast as possible.

So if you are serious about it, it is advisable to learn how to program or use advanced pre-made trading software. Aside from the normal arbitrage conditions stated earlier, with cryptocurrency trading , we will need an additional set of criteria and heuristics.

One of the most common sources for price data is CoinMarketCap. It is one of the first exchange prices aggregating websites in crypto and has over crypto assets listed. However, the free version has limited functionality. Lucky for us, it has well-maintained API wrappers in several languages. Or to follow along, you can go to coinmarketcap.

It should look something like this. Here is a short script containing only 3 functions that use the Coingecko API. What it does is essentially the same thing that we would have to do manually if we were searching for arbitrage opportunities in the markets. It checks all the markets for a given coin or token. Next, it takes the highest price and lowest price, finds the absolute difference, and returns that as a percentage.

The bigger the spread the more profit potential because the spread is your profit minus trading and transaction fees. Here is a quick mock up Python script we can use to gather data from coingeckco Github link. So we will have to manually check these pairs. No way! This may explain why there was such a large spread.

And also why no one had exploited this opportunity already. Perhaps markets are efficient and the difference in prices on the two exchanges was simply the discounted, risk-adjusted cost. Often when a coin on an exchange has its wallets disabled, the market can view it as a risk because it could be happening for a number of reasons ranging from exchange insolvency, a hack of the blockchain or token, or a simple technical issue. That is if the wallet got reactivated shortly.

Market volatility could easily wipe out these gains if you had to wait days or even hours. I found a few other examples of a large spread which also happened to have wallets that were in maintenance mode. So this seems to be a common false positive that we should look out for. However, if you are a risk taker, maybe it could also be an opportunity to profit as the price should correct as soon as the wallets go out of maintenance mode.

So it appears that simply taking the spot price might be insufficient. I spent some time looking for opportunities based purely on the spot prices and they were few and far between. I suspect most of the time there were similar issues with the trade that might not be immediately obvious until you actually try to execute it.

For instance, such as transaction time or risk similar to that we see in other markets with large price differences, such as the Korea cryptocurrency markets I mentioned earlier. We are going to first look for arbitrage opportunities within an exchange between an asset with several pairs. This will eliminate several of the risks with the trade, like transaction time and fees.

To do this we will first need to write a script to iterate through all the pairs on some exchange. In this example, we will use the public Bittrex API. Our script will not only iterate , but also produce some graphs. Here is one output graph from our new script Github code. This shows us the prices converted to USD of the different pairs.

On the bottom of the graph in orange you can see the size of the price difference. This could then cause the markets to have differences in efficiency, leaving us with opportunities for arbitrage.