Topic: Friendly note: You might want to be careful of the so-called arbitrage trading - page 2. (Read 346 times)

AFAIK, still there are plenty of people who don't know how to be an arbitrage trader, A few months back I heard about some protocols directly allowing you to explore the multi-exchange market for the best prices to trade using a platform mult-exchange supported wallet, until now I haven't heard of it again. Most of the time, the trading pairs with high liquidity perform quite similarly in every exchange except for those with lower liquidity. Arbitrage trading with the Centralized exchanges Until now I haven't heard of such a case, but it is really concerning that such type of trading can grow in the DeFi space where the money capitalist can easily manipulate the market markers for such actions.

You have made a valid point here. I was not aware of the fact that arbitrage trading is prohibited on Forex or on any type of trading. But those exchanges are using this in their own favor. In my opinion, it is not bad to ban or lock the accounts of users who are caught doing AT, but creating an environment for people to fetch them into this field after their accounts are locked is not a legal thing. And that shall be investigated.

And thanks for the heads up; even though I am not involved in arbitrage trading, I will try to warn others who do this.

As far as I know, it won't be a problem for crypto exchanges, as last time I read a post, someone said the Korean exchanges are best for AT. Because the difference between prices in that country and other countries is like a lot. And I personally checked it, and it really was. But I did not give it a try because I thought money could not be that easy to make and there must be some catch in it.

He did not mean to say that. Instead, he made it clear in his post that Forex Exchanges had written in their policy that such practices would not be tolerated and, once detected, the accounts would be locked. And as a result, the owner will lose access. He also said that many forex exchanges have been tagged and investigated because they were luring people into arbitrage trading so that they could lock their accounts later and make some good money.

The point is, he was providing us with a new set of information to avoid such conditions where our assets would be gone while performing arbitrage trading in crypto exchanges.

PS: I am not sure what the source of the OP is, so do not take my words for granted that forex has some policy like that because I really do not read policies. Ask the OP for that. And besides the fact that we should avoid CEXs, which many people still do, they should keep this information in mind before doing arbitrage trading.

AFAIK, different prices on various exchange is to the open order place by the traders that using single exchange only. Some exchange has different price to others because some of their user is buying or selling more volume than different exchange. The difference on liquidity in the orderbook gives a huge impact on why arbitrage trading is possible.

There’s nothing wrong on arbitrage trading because exchange gets profit from transaction fee and not from user trade losses. They are not like casino that relies on customer losses for their profit.

I do not know when I became acquainted with the cryptocurrency market, but in 2017 the difference between one price and another was more than 2000 dollars, at that time 2000 dollars may equal 30% of the price of bitcoin.

Therefore, as long as there is a possibility of profit, arbitrage will continue to exist, and in the end it requires a fast bot and you need to have an account in central platforms. The only problem is making it a guaranteed way to earn thousands of Bitcoins, which is not real and becomes more difficult as days pass. even if there are no regulations, I expect arbitrage to disappear within 10 years.

So you are saying exchanges are locking/suspending accounts or trades because they believe the person is doing arbitrage trading?

I don't think so and there is no reason for them to do so because they are not going to lose anything even the other exchange because it is going to bring more transaction fees and withdrawal fees for them which mostly contribute to the exchange's profits.

I agree that arbitrage trading is highly risky but doing it not going to upset the exchanges so if traders can able to find price differences in exchange for a particular coin and they successfully manage to execute the trade within the timeframe that will end up in profit for them but its highly unlikely for anyone to succeed consistently.

It's so unfortunate that arbitrage trading is now gaining more relevance in the crypto industry, to the extent that people have started including it as a way to earn in the industry, which is supposed not to be so. This is largely due to the fact that cryptocurrency and the activities of exchanges are highly unchecked, if not, arbitrage could not have gained so much traction that people would start taking easy advantage of the so-called suspected manipulation that is now happening in the crypto world.

It's true that arbitrage trading is not illegal and has been for ages in the traditional market but you hardly see people enriching themselves easily with it since the lapses are not always there and the condition is not always encouraging and might be unappealing too (that's how a true market should be). Also, everyone has to be very careful as some businesses frown at it once it's too obvious. This could partly explain why some exchanges lock some people's accounts without telling them the reason. Even in the terms and conditions of Forex brokers, they plainly state it there that it's not allowed. This is despite that it's not illegal, and if caught, the account will be blocked.

It's so unfortunate that the lapses and lack of central coordination and cooperation among crypto exchanges cause what should have been a rare occuring phenomenon to now become common.

I won't also be surprised if exchanges are deliberately using this to enrich themselves. It's easy to manipulate prices against the prevailing price for their gains.

Many big brokers and banks (market makers & liquidity suppliers) have been heavily sanctioned with huge amounts in the past while caught with such unfair practices. But who will coordinate or sanction the global branch of exchanges?

Above all, my plight here is that you should think more about your account before you are engrossed with arbitrage trading, exchanges can't be trusted. Ask yourself, is the risk worth it?