Arbitrage is when you buy some thing on one market and sell it for a higher price on another market, pocketing the profits.
You can do this on the crypto coin markets.
To find good crypto coin arbitrage opportunities simply follow: Arbitrage Alert on Twitter.
Follow this account on twitter and he posts good arbitrage opportunities several times a day as they arrive. Profits are usually in the 10% to 20% range although occasionally they go up to 45%+.
If you get set up and do arbitrage daily you can pocket a tidy sum of money but there some additional things to keep in mind.
1. Most arbitrage opportunities involve buying with BTC and then selling back into BTC for profit. Some opportunities only employ ETH, so it might be worth keeping enough of this on the exchanges you use.
2.To do a successful arbitrage swap, you will need to be a member of both exchanges. So you need to be a member of a number of exchanges first. Keep an on the arbitrage alerts to see which ones are most popular. (Poloniex, Bittrex, Cryptopia and HitBTC seem to be the most used.)
3. You will need to have BTC (or ETH) on the buying exchange beforehand. Best to keep some there ready to buyt when the opportunity presents itself.
4. Before deciding to execute an arbitrage trade, notice the supply available on the exchange. If it is very small it may not be worth doing.
5. The biggest catch is the time it takes your newly purchased coins to show up on the selling exchange after you send them. It can take anywhere from 10 minutes to over 24 hours in some cases. Some exchanges seem better than others in transferring coins. Click here to see actual recorded times between exchanges: Arbitrage delay times
6. Take into account the fee charged by the exchanges to buy, transfer, and sell. Although not usually too high, they do cut into your profits, especially if you are doing a narrow arbitrage transaction (10% or less).
7. Before going ahead and committing to buy coins on the lower priced exchange, go into the exchange you plan to sell on and make sure there is still a worthwhile gap in prices. Sometimes those window narrow over time making it not worth it.
Doing crypto arbitrage is an activity that takes time and attention. Depending on the sums you are working in and the difference in prices between buying and selling, you could make a tidy sum everyday. Just 5 or 6 arbitrage swaps a day should net you a 50% increase in your initial investment, possibly more.
If you already do crypto arbitrage, let me know of your success, and any pitfalls to avoid I haven't covered.