Cryptocurrency arbitrage refers to buying cryptocoins on an exchange where the price is lower and simultaneously selling the altcoin at an exchange where the price is relatively higher, ultimately profiting from a temporary difference in prices. The prices of cryptocurrency may vary from one exchange to another, because the markets are not directly linked. The difference in supply and demand across exchanges may result in significant price fluctuation. Often it may take time for prices to adjust to global average
It is important to understand that when markets have some discrepancy in pricing between two pairs, there is not always a guaranteed arbitrage opportunity, because a transaction costs may take away the benefits of the possible arbitrage opportunity and also some times wallets of cryptocurrency are in maintanance .
Arbitrage is not an easy job as u have to do so much of research and also its not for everyone . Only experienced persons can do it , u have to be very fast to make profit out if it . If u guys don't know how to do it then then don't try it . First study about it properly gain some experience, follow the people who are already doing it then u can also try it . Arbitrage some can be very profitable this is why most of people these days wants to do it but at the same time it can be very risky.
Always Do your own research and then take entry.
Some of the important things to remember before doing arbitrage .
Transaction cost - It is important to know that if u are sending crypto out of that exchange that what could be the cost of sending , as it will decide how much exact profit u will get in arbitrage .
Transaction speed - Thats also very important as if u r sending crypto to other exchange and due to any reason if it will take more tym to send as sometimes there are many pending transactions on blockchain , then may be u will loose the opportunity of arbitrage.
Wallets are Active or Not - This is a very important point to remember that always check that the wallets from where u sending and the wallet to where u sending both are active , because if one of the wallets are not active then it will take long time to send it and there is also a possibility that u could losse ur amount forever .
Calculation - It is very important to calculate that how much profit u will get if u do arbitrage . Always do calculation first that what the transaction cost , price difference etc. This will help to reduce your loss .
There lot more about arbitrage which i will disscuss in my next posts.
If u have any ques. Must ask in comments .