Topic: Bitcoin arbitrage - how to do it? (Read 170 times)

You can hold your bitcoins and get profit. The ROI, after several years, will surely be good enough for you and actually bigger than 20 or 25% as you want to gain.

The challenge for you to succeed and gain that 20% or 25% ROI in average is time of your holding. It must be some years, not one or two years.

See the HODL camp
https://hodl.camp/

Arbitraging is a type of trading  and it is more risky than holding. I have an extra warning for you, arbitraging BTC is risky already but if you choose to swap BTC to Wrapped BTC tokens, risk will be bigger. Those tokens are not actual BTC, that is why you will increase risk by swapping your BTC coin to Wrapped BTC tokens.

It will give you more convenience to move cross chains, swaps but risk is much bigger.

These days I think that's not profitable anymore, you could just end up losing on fees especially if you're not using bots. It was a loophole back then but I think exchanges already know it and they are likely to take advantage on it too, so for those who aren't that diligent it's probably not for them to do arbitrage.

You can look at open source software if you want, since this will give you an idea of what it is needed for a bot to function as it should when taking arbitrage opportunities, however we are talking here about letting a piece of software to manage your finances, I would not trust any software developer for that as you could lose all your money if there is a virus or any other form of malware hidden, and this means that if you want to trade this way, you do not really have any other option than to create your own bot.

I have tried it manually by identifying the difference in the price of coins and also subscribed to any arbitrage plan but both were unsuccessful and way too hectic than we think. Sometimes the coins which are trading at lesser price in exchange "A" would have higher withdrawal fee which eats up your profit or the liquidity on the exchange "B" where you want to sell is very low since mostly you will find not so popular exchanges if you are looking for arbitrage as the price remains same in most of the top exchanges.

@crwth started this topic Automated Trading Challenge - Starting out at $1000
Follow his experience with that topic, and if you have a question, you can ask him.

Arbitrage trading requires that you have a good trading bot, so you will start by answering the best bot and the best strategy, and then you need to check the tax laws in your country and how taxes are calculated, then the amount you want to invest and the extent of trust that the trading platform will not go bankrupt. these are factors that make any type of trading very dangerous, especially with the possibility that Bitcoin will rise significantly during this year.

If you ask me, I would say that trading is good in a bear market, something like 2026.

Thank you tberryboy for the reply 

If you're considering diving into this BTC arbitrage game for that sweet 20-25% annual gain, be on your toes and do some serious digging. If you're thinking of using trading bots, there are open-source ones out there, but give them a good shake-down before you let them loose with your hard-earned cash. Stick with brokers you can trust, but don't kid yourself – there's still a bunch of risks floating around, like the market going crazy and dealing with delays.

Keep your eyes glued to real-time data, mind those fees, and don't put all your eggs in one basket. Beef up your security game with two-factor authentication and don't slack on staying in the loop about the crypto scene. Start small, learn as you go, and maybe chat with some folks who've been in the business for some time to gain some experience and knowledge that can be useful.

I thank everyone who responds. I am happy with what I learnt. But you can keep the topic alive for other people to get enlightened.

One question: One of you told: https://gunthy.org/bitrage  --- can there be a virus in that or is it open source?

Thank you!..

You can make money doing anything, the question is: do you have the time to dedicate to it? Will the financial return be worth it? Is the cost of your working hour doing this more or less than what you earn per hour working in your formal job?

It all depends on a series of factors, but if you don't understand this, don't do it, as the risk of losing money is high.

Of course bitcoin is widely known to be the best for long-term investments however if some people already need the profit then there is no harm in finding other possible ways to gain money within the bitcoin ecosystem I think it could be possible to have different amounts of bitcoin for trading and bitcoin for long-term investments

They're probably much faster now because I've heard of these bots way back in 2018 and they're already doing 100k trades per minute or second (I can't recall) and that's back then it's just stocks which means that there's a developer already somewhere out there that's done and copied this bot to trade in crypto. I envy those programmers that can create this bots because of how much companies would be paying for this and the fact that you can use it yourself to make trading more convenient for yourself.

ah yes those days too. however by that point my cold wallet stash was more then what id want to risk on CEX and the order amounts were so small that the effort was not worth the reward. 1% of a 1% of a 0.1% wasnt worth it, it didnt accumulate much compared to cold wallet stash %. it was more for fun, small play money amounts by this time.. not coin accumulation


not good advice.. if you got the coin you shouldnt lock it up and the use someone elses at a margin rate which could lose more then you had.
just do old fashioned sell high buy low of own coin. even if the opportunities are not daily/monthly
EG
selling ATH year(halving+1y) buying correction year(halving+2y) should net you more then 50% per 4 years(more then 12% a year per 4 year cycle)

I don’t think you can arbitrage these days. I used to arbitrage back in 2015 on Poloniex, Mintpal and Bittrex because back then there was no money in crypto pretty much and most of the MM stayed out.

Basically I had a crappy Python script which would track prices of certain pairs using API and if I got a match I would get an alert and manually I would buy the coin, then send it to the other exchange and sell it there. Back then transaction fees were near free and you could make decent money this way.

Now? Forget about it. Your competition is some ultra fast bot with deep pockets. If you want you can try and buy bitcoin and sell Bitcoin futures and use your bitcoin as collateral for the trade. Last I checked I think you could make 12% APR this way. Just do 1x leverage so you don’t get liquidated.

trade-fi (old language) talk about different exchanges. but crypto can do it via going through same exchange market tradepairs on the same exchange because crypto allows different trading pairs to internally do swaps
..

but even running through the trading pairs to arbitrage cycle back to base asset on the same exchange. the timing of doing it manually vs bot trading means opportunities do not always occur or last long, so difficult/risky to attempt unless lucky

the main risk is. you cant be a 'maker' where you set a preferential price and add it to market orderlist for someone to take. and do it again on next trading pair and next to get back to base to get profit at set order prices..

instead you have to be the taker.
taking whatever orders others have set so you can rapidly arbitrage the trading pairs back to base asset.. if every other bot is doing the same you might be stonewalled mid way and end up taking a order at a loss compared to the situation when it first arose half a second earlier.

..
when they say "make 20%" a year
what they are talking about is not a one shot wonder of 20% win.
its instead not using a lump sum amount but small allotments to not hit walls.

lets say you have 0.1, but most orders are 0.001
so you can only play 0.001 at a time
each time you play and succeed. there is 3x 0.1% fee meaning 0.3% fee deducted.
and so you need to see opportunity of atleast 0.4% (super risky) spread over the arbitrage cycle to cover fee's just to earn 0.1% profit of the 0.001

so each play ends up being 0.00101 (0.00001profit)
so to turn your stash 0.1 into 0.12 (20%profit) you need to do 2000 plays a year (5-6 plays a day)

spreads per tradepair used to be wide years ago. arbitraging was super fun in the 2012-14 days. but since bots took over on most exchanges the opportunities and dried up and most times end up getting stuck mid arbitrage faced with having to take an order at a price you didnt want to take

The best way is not trading or arbitraging.

You can hold your bitcoins and see it helps you to gain massive ROI.
With 4 year or 7 year of holding, you will have very high ROI that gives you more than 20% or 25% gain each year.

https://casebitcoin.com/

Is OP talking about arbitrage trading where you use price differences across different exchanges to your advantage? This is difficult to do with BTC as most exchanges are pretty good with up to date bitcoin prices these days and tx fees and times make it impractical. and you would need significant capital to make any profit.

people do this in nft marketplaces like opensea. if you closely watch the live trades you can clearly work out the successful bots that are working to match profitable trades. i tried to make one but it is difficult to compete with the existing bots on the site.

Where did you heard that? There's no such. However, you can do that with trading.

If you do the trade, your funds that are on your account will be moved. Yes, the funds remains on your account but they're going to be moved into the actual trade. It's like you are betting to the market and you don't want your funds to be taken by the casino? It's the same with what you're thinking and it is impossible to just see your own funds remain there while doing the trades.

If you want to keep money in your account, then you would have to do triangular arbitrage trading. Manually, this is technically impossible as you will be competing with bots. The only popular bot I mostly hear about is gunbot, but they say that their arbitrage tool is not yet open to the public (https://gunthy.org/bitrage). They are still in beta testing phase.

You would also have to pick up and exchange with very low trading fee or have a very high trading volume so that you enjoy those VIPs tier lowered fee benefits.

To be honest. I did try arbitrage trading back then (manually, of course). It was so hectic and unprofitable.

Thank you Franky1. Is there any open source software or a fund manager trades in my own account?

You told I am trying to get rich with arbitraging. As you saw I am fine with 20% per year. This is opposed to most of the BTC investors who want to maximize returns faster. My government gives bonds with 10% and I am fine with 20% when arbitraging.

simple
dont just use BTC/USD
dont just buy btc using USD
dont just sell BTC to USD
because then you are left waiting for the markets to correct before jumping back in


instead arbitraging is to use the other markets to arbitrage cycle clockwise and anti-clockwise to get back into position to then take advantage of BTC deals
[BTC->USD]->[USD->ETH]->[ETH->BTC]
[BTC->ETH]->ETH->USD]->[USD->BTC]
(i do not endorse the ETH market, its just an example)

once you know the technique you can find your own market coin(s) to hop across to cycle back quickly and maximise deals. different coins rate at different rates so different opportunities arise at certain times

i feel you dont understand arbitraging nor its method nor techniques. you would be at risk.. it seems someone just blindly told you "get rich arbitraging" and thats the extent to trading knowledge given to you