Investors can profit from arbitrage trading by looking for price disparities for the same or similar cryptocurrency assets across multiple marketplaces at the same time. Traders can manually track the difference in rates, which is time-consuming, or they can utilize specific software, which is more effective and profitable. Below, we examine this approach in greater depth.
What is arbitrage trading in crypto markets?
To profit from arbitrage, a trader buys crypto assets in one market, then immediately sells them in another at a higher price. Making money this way means taking on little or no risk in the process. There are many advantages to arbitrage trading, including the fact that it doesn’t require a lot of money to get started.
For example, if 1 ETH token on Coinbase sells for $ 3,500 while it costs $ 3,550 on Kraken, then you can buy 10 ETH on Kraken and sell them on Coinbase, which will bring you $ 500 profit. Arbitrage trading in cryptocurrency is primarily divided into two types: arbitrage between crypto exchanges and within the same exchange.
Because exchanges have slightly different markets, the first method is the most straightforward approach to use crypto arbitrage in your favor. Some variations, however, allow you to take advantage of price disparities inside exchanges.
How to spot arbitrage opportunities
Use new software
This strategy’s workload is made more difficult by the sheer number of cryptocurrencies and exchanges. That’s why so many traders utilize real-time tracking software to keep tabs on the hundreds of different cryptocurrencies.
An increasing number of companies are focusing on developing crypto arbitrage software to automate the process. In some cases, investors can choose an arbitrage strategy and have it automatically executed on multiple exchanges.
Go for less popular cryptos
Cryptocurrencies that are less well-known and less regularly traded can offer larger price spreads for the same digital assets.
These cryptocurrencies, on the other hand, are more volatile due to their relative obscurity. Regardless of whether it’s good or negative news, volatility increases these opportunities.
Best platforms to use
Bitsgap
To find coins with the greatest arbitrage potential, it analyzes more than 10,000 crypto-to-crypto pair transactions. Additionally, you don’t have to download anything in order to use this trading bot. Automated bots labor around the clock at this crypto arbitrage exchange. Detailed Tradingview charts allow you to monitor the performance of your bot. This service is available at a monthly cost of $29/month.
Pionex
Pionex is an exchange with free built-in arbitrage trading bots. Furthermore, Pionex charges only 0.05% for their whole arbitrage package. Huobi Global and Binance, the two largest Binance brokers, pool their liquidity in this arbitrage bot. Additionally, the bot uses the Binance broker system to leverage the futures market to help you earn a profit every eight hours.
Coinrule
Sending automated trading instructions to your preferred exchanges has never been easier with this user-friendly and secure platform. 150+ trading strategy templates are available on this platform. More than 150 rules are available, and users can evaluate the performance of each rule using historical data. It comes with a free trial.
3commas
With more than 20 trading indicators to choose from, it is one of the top crypto arbitrage bots. Using a free trial will allow you to get to know the tool better and learn more about the platform’s services. The paid subscription is $14.50 per month. It has the advantage of automating both purchases and sales from a single window.
Trality
Trality is a platform for expert crypto traders to trade crypto arbitrage. Using this bot, you’ll have access to some of the most advanced tools for creating complex, creative algorithms.
It’s easy to build a bot with Trality’s tools, and you can use them for trading on exchanges using APIs. The platform provides easy-to-use tools for constructing bots, including a simple code editor and simple drag-and-drop capabilities. But python experts will get the most out of it. The trading volume is limited to €5,000 in the free beginning plan. Paid subscriptions begin at $9.99 per month.
Cryptohopper
With their platform, you may trade arbitrage on price disparities across a number of trading platforms without having to withdraw your tokens. Blockchain-based trading bot CryptoHopper is based in Amsterdam, Netherlands, and offers cloud-based algorithmic trading. There is a free version as well as a subscription version starting at $19/month.
Tradesanta
Cloud-based trading software TradeSanta is suitable for novice and experienced traders alike. If you’re looking for an easy way to set up and automate a crypto arbitrage trading bot for any of the main trading platforms, TradeSanta is a great option for you!
Crypto traders can set up rules and parameters, which can be automatically triggered if certain conditions are met. Additionally, if you run into any issues with the bot, TradeSanta’s customer service team is available around the clock to assist you. You can reach them by email or Telegram. Tradesanta has a free trial for all its plans, and the monthly fees start from $15/month.
In summary
The practice of arbitrage is well-known and well-established in numerous markets. As a result, it’s likely to be profitable. It does, however, need a great deal of commitment and perseverance.
If you’re a day trader in crypto and the market isn’t moving much, arbitrage transactions are a great way to make profits. Arbitrage can pay off handsomely if you’re tenacious and quick to move on to good opportunities when they present themselves. But the amount of money you put into it will be the most critical factor. Five percent of $1,000 is not the same as 5 percent of $1 million in profit margin.
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