Hello Crypto-Fans,
Today we do a short trip to the world of arbitrage trading!
I will explain the following points in more detail :
- What is arbitrage and where does it come from?
- How do you make profits today?
- Fees and risks!
- How do I find trades?
What is arbitrage and where does it come from?
Arbitrage trading goes back to the 14th century and describes a move to buy cheap in one place to sell it more expensive somwhere else. For example: "The correspondence of the trading house Stromeir from 1384 shows garbage arbitrage deals with Genoa."
International arbitrage trading in the 14th century, was way more global than I would have expected.
Later in the early days of stock trading, this was also possible for some time. So you could buy a share on the Berlin Stock Exchange for $ 100 and sell them on the Frankfurt Stock Exchange. So if the stock is more expensive in Frankfurt, the dealer got his profits less the costs.
How do you make profits today?
Unfortunately, arbitrage trading has become unprofitable for many years. Because new technologies, in this case the telephone and the Internet, allow us to send data much more efficiently and thus a price gap between the stock exchanges becomes even smaller. In addition, here too, the fees reduce our profit and so we need significant spread differences of at least 5% or more (depending on the depth of your own pockets).
Arbitrage possible again today?
.
Yes, with cryptocurrencies, and the list of possibilities is long.
Why are there different prices for the same coin on different stock exchanges?
The price of a coin is mainly formed by supply and demand (how exactly the price comes to stand and the bit / ask price, there will soon a tutorial).
Now it can happen on a stock exchange due to extreme offers or demand that Coins has very different prices. Here's an example:
Here we see the currency pair XEM / Bitcoin on the exchanges Cryptopia and Upbit with a price difference of 11.6%.
So now I buy with "Bitcoin" for example, § 1,000 "XEM" on Upbit.
I'm sending my new "XEM" to Cryptopia.
I am selling my "XEM" for "Bitcoin" on the Cryptopia Exchange and wipe out a profit of 11.6% minus fees.
Here is a sample calculation in Excel
As you can see, the fun will be profitable from about 500 € per trade. The fees are rounded as they vary depending on the stock exchange. This should be checked on every trade to avoid mistakes.
Starting at 10,000 € it's really fun, since the fees for a profit of 1,150 € are not much significant!
Fees and risks!
As described in the previous examples fees for the transfer from one to the other exchange . You need to be sure, that you don't have to shift the money several times between the stock exchanges. Otherwise it will be expensive soon.
Rip off fees for deposits and withdrawals to crypto exchanges? and a way out !!!
Risks
In this case, we have relatively few risks that we need to clear up before we act.
- Risk of fluctuation
The market can change at any time. So it has to be fast. Take a close look at the Coin, check the market depth of each order book to see how many coins are available at what price. Otherwise you'll get slippage, which means your average price per coin will increase. Can be expensive.
- NO TRADES ON NEWS DAYS !!! IMPORTANT
When important news come for the market or the coins, always keep your hands off. No matter how nice it looks !!!
- You can sometimes only buy new coins, but you can not sell them yet. Then you have a lot of coins lying around. You do not lose money at the same time, butthan you can trade less.
- Sounds easy, but this has already burned some money!
You need at least 2 ways to get online. If you fly off the net and need 10 minutes to get back online, the course can be somewhere else.
What if the spread is huge?
As for example here:
759.2% Awesome ! or not ?
Since cautious with such large numbers, there are times like system errors in the stock market behind it. In this case, I was not able to log in to BitInka.
So I could not see exactly what it is.
But there are several ways why!
- There could be very few very high transactions, but the stock market does not have the marketdeep to trade high quantities.
If there are many small transactions, we have significantly more time for such a trade.
How do I find the good trading options?
I had to search really long to find a usable matrix at all. Even most paid sites are absolute ....
But the cool thing is, I've found a page that is even free and from overview to the selection of the stock exchanges and coins. (Thanks for that to Istanbul, that's where the site comes from)
Here the link -> coingap.org
Should you have more such screeners that are good. Please put them in the comments.
Please Comment what you think about it.
Have fun,
best wishes bitcoin.news
