The idea is good and is something I would find useful, however there are many questions that I have regarding the actual functionality which would either make it useful or not:
1. Are you going to limit it to just a few exchanges?
2. Will you be using your central API key just to pull the information you need for calculation?
3. Will the user have to program his or her own API keys into the program?
4. Will you just give the answer and then the user has to do the transaction on his or her own outside of the program or will the program do the transactions on behalf of the user with full trading API keys of the user?
5. Will the user need to (a) fund the exchange accounts with all relevant coins including BTC or (b) will the coins still need to be moved to the relevant exchange?
6. If 5 is (b) how will you account for block times and confirmation times in the movement of coins between exchanges?
7. Will coins be moved between buy and sell transactions or will transactions be simultaneous on both exchanges utilizing pre-funded coins, with settlement end of day or after a period of time
8. How will you account for transaction fees as sometimes there is arbitrage but transaction fees are higher than the gain. Therefore transaction fees will negate arbitrage up to a certain threshold after which it becomes profitable. The frequency of settlement also plays a role here.
9. How will you take into account blockchains that are stuck or coins that are under maintenance on exchanges? Many times arbitrage develops because of an issue with the coin on the one exchange and market forces cannot keep things in equilibrium because of the issue. This could create a false arbitrage result and the coins could actually get stuck in transit.
I would appreciate your answers to these questions to understand your project better.
Hello, very good questions.
1. Regarding exchanges, we are focused on our exchange, which will be released in early 2020, but we are also negotiating with other exchanges. We are not limited in exchanges and of course, they will not be one.
2. At the moment, the API key will be used only for calculating information both from exchanges and from a service such as Coinmarketcap.
3. All API keys can be configured in the "Settings" section of the program.
4. The program will not trade using your APIs
keys. The program will only provide information for the transaction, and the user will decide whether to conduct such a transaction or not.
5. The question is not entirely clear. If we understood correctly, then the user will need to replenish accounts outside the program, on the exchange himself, and not through the program.
6. The approximate retention time will be in real time based on price glasses.
7. Coins will be moved between purchase and sale transactions
8. The program will know in advance the amount of commissions on exchangers, so it will take them into account in advance and show profitable transactions.
9. Our program analyzes only those coins on which there is no service or any other problems.
Regards, WCode Team
Thanks let me clarify points 5, 7 and 8 in one paragraph.
There are two ways to do arbitrage. Strictly speaking arbitrage is the simultaneous buy and sell on different exchanges requiring accounts to be stocked upfront, doing transactions and at certain intervals doing a settlement to set accounts back to the original amounts. This also removes waiting times. The second option is to buy on the one exchange, and sending the coins to another exchange to sell and in the process make a profit. This option is exposed to waiting times for coins to confirm and moving from one exchange to another and risks of the arbitrage window to disappear while waiting for coins to confirm. The second option is also exposed to exchange withdrawal fees (network transaction fees) per transaction that needs to be taken into account. No use in making a small arbitrage profit but paying more for the withdrawal fee from one exchange to another. From what I gather you will be doing option 2.
