yep, arbitrage is to transfer 1 asset / coin from the same exchanger. eTH coins from bittrex to binance. how to take profit? of course, with a significant price difference. but for me personally, not all coins can be done. My main choice is the speed of transaction delivery. even though an open deposit and withdrawal coin has a difference in price. but slow in the shipping process. I will not arbitrage. that's a big risk. experience a few weeks ago I arbitrage AEON from hitBTC to bittrex, the price difference is more than 5% but the transaction confirmation process is very slow that is more than 12 hours. so I did not continue. so before arbitrage please pay attention to this:
- deposit information
- withdrawal information
- transaction speed
- transaction fee
- open bid (sell and buy)
- alternative coins to return to the previous exchange.
In the article I go over two approaches. One is to purchase a coin, transfer it to another exchange, then sell it. This is slow and risky since you can't guarantee the spread will still exist after the transfer. The other solution I describe is to hold balances on both exchanges and just submit accompanying buys/sells. This avoids the transfer time and cost issue, but obviously requires you to hold balances of both already.
in the second option, if you have funds for both exchanges. to cut transaction time, I don't think you can. how do you conduct arbitrage, while you do not transfer to another exchange that has a higher price. if you don't make a coin transfer, I don't think you arbitrage. You only trade at prices that have not yet risen from other markets through your balance on two exchanges. example: BAT / BTC in market A is 100sat, while in market B it goes up to 125sat. but you have balances on both markets. and you buy at market A instantly and wait for it to pump like market B. well, basically it's the same as arbitrage. but it is not arbitrage.
Alright I will go over a scenario here that explains how arbitrage works without transferring between exchanges. To make it simple let's assume a pretty large spread, so it makes it easier to reason about and see the impact.
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Starting stateExchange A:
BTC-USDC rate: 7,050
balances:
50,000 USDC
Exchange B: BTC-USDC rate: 8,000
balances:
5 BTC
Total portfolio:
50,000 USDC
5 BTC
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Placing tradesExchange A:
buy 4 BTC with 28,200 USDC (7,050 * 4)
balances:
4 BTC
21,800 USDC (50,000 starting - 28,200 traded)
Exchange B:
sell 4 BTC for 32,000 USDC (8,000 * 4)
balances:
1 BTC (5 starting - 4 traded)
32,000 USDC
Total portfolio:
53,800 USDC (21,800 + 32,000)
5 BTC
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Ending stateTotal portfolio:
53,800 USDC (21,800 on Exchange A+ 32,000 on Exchange B)
5 BTC (4 on Exchange A + 1 on Exchange B)
You started with 50,000 USDC and 5 BTC. You now have 53,800 USDC and 5 BTC. You've accumulated more USDC without losing any BTC by exploiting the arbitrage spread of BTC-USDC 7,050 on Exchange A and 8,000 on Exchange B.