First I want to give you a brief intro of myself... Last November - December I started noticing arbitrage opportunities occurring quite frequently in cryptocurrency markets just before and during the bull run and it is happening all over again! I was able to capitalize off of every single arbitrage deal I ever acted on... 20% or more each time in a matter of minutes. This led me to create my own arbitrage platform so I can could get alerted to these arbitrage occurrences in real-time. Here is a nice strategy I developed I 'd like to share with everyone...
⏰ Be Ready at all times
having money in USDT ready at all times on the exchanges you are comfortable arbitraging on
get an arbitrage alert platform that gets you the info you need to see the quickest
once you spot an arbitrage opportunity or get an alert act on it as fast as you can
🤔Follow this quick checklist:
✔️ act on HIGH VOLUME arbitrage opportunities (unless you are investing small amounts which is supported by the current volume)
✔️ act ONLY on arbitrage opportunities based on profit potential of 13% or more
✔️ MAKE SURE WALLETS ARE ONLINE on both exchanges
✔️ buy as many coins you desire from the exchange it is selling much cheaper while paying attention to make sure the spread still exists by checking the exchange it is selling for at a much higher rate
✔️ once you are done accumulating, transfer to the other exchange and sell as fast as you can
From my experience I was able to transfer most ERC20 coins in 7-10 minutes time and sell them pretty fast (40k worth) over a few minutes time. Some coins are known to transfer fast like XRP, ETH, Nano, etc. so it is wise to be familiar with coin transfer times. There are some like BTG that transferred on average of 15 minutes to 30 minutes although one time it took 3 hours but I was still able to make at least 18% or more every arbitrage opportunity I ever acted on.
❓Let's talk about why arbitrage opportunities occur?
A seasoned trader will understand that most coin prices begin to rise when breaking certain resistances and trend lines. News will sometimes create arbitrage opps but they are mainly caused by huge money being pumped into coins by institutions. Last December we seen that most coins chart displayed extremely bullish patterns. Once they broke resistance it usually rockets up to a higher price and usually starts forming a new pattern that will allow the price to go even higher. The amounts of cash flowing into coins at a much faster rate creates a spread between exchanges which creates an arbitrage opportunity.
🐋Let me debunk the misconception that one whale can eat up all the volume for himself using an arbitrage opportunity that happened just yesterday
Yesterday I was alerted to ADX/BTC which was pumped up over 65%. It was trading for $1.19 on Bittrex and $1.47 on Binance which is around a 25% or more price spread between the exchanges.
The 24 hour volume on ADX/BTC on Binance alone was over $51 million dollars most of which was traded during the arbitrage opportunity!
That is a ton of volume for literally thousands of people to make a profit from by swapping these coins between exchanges. I usually trade around 40k at a time during these occurrences and I have no trouble getting my orders filled in minutes while transferring and selling on the other exchange.
📈 Arbitrage opportunities are common before the start of and during bull runs
Arbitrage occurrences usually occur at the beginning of bull markets and we are beginning to see them occur more and more on high volume exchanges. This is how we see the market caps rise and prices of coins go up so quickly... Today there was another that occurred for ticker DNT/BTC this time it had even more volume roughly $70 million dollars worth on Binance alone. Unfortunately I was watching the movie "A Quiet Place" at the movie theatre so I wasn't able to act on the alert I received.
Feel free to ask me whatever questions you wish! Here is the arbitrage platform also here is a medium post I wrote that goes a bit deeper https://medium.com/@chasarcaulon/why-arbitrage-spreads-occur-in-cryptocurrency-and-how-to-trade-them-like-a-pro-51869422c5d5. I obviously am quite familiar with arbitraging and it is the only type of day-trading I personally do so let me leave this disclaimer...
Disclaimer regarding investment decisions and trading
Decisions to buy, sell, hold or trade in currencies, securities, commodities and other investments involve risk and are best made based on the advice of qualified financial professionals. Any trading in securities or other investments involves a risk of substantial losses. The practice of “Day Trading” involves particularly high risks and can cause you to lose substantial sums of money. Before undertaking any trading program, you should consult a qualified financial professional. Please consider carefully whether such trading is suitable for you in light of your financial condition and ability to bear financial risks. Under no circumstances shall the creator of this post or we be liable for any loss or damage you or anyone else incurs as a result of any security, currency, trading or investment activity that you or anyone else engages in based on any information or material you receive through ArbiSwap or our Services.
Original post can be found here https://www.reddit.com/r/CryptoCurrency/comments/8e6rze/amaeli5_why_arbitrage_spreads_occur_in/