What is arbitrage that is fully automated and movement-free for cryptocurrency? (Series 4)

Arbitrage trading aims to efficiently generate profit by taking advantage of price differences between exchanges and selling at the higher price.

However, since arbitrage requires moving virtual currencies between exchanges, prices can change while they are in transit.

Therefore, this explains how to conduct arbitrage trading without moving funds between exchanges.

“Benefits and drawbacks of arbitrage trading”

• Benefits

Arbitrage is a term used for arbitrage trading, a commonly used word in the stock world.

In the world of cryptocurrencies, even the same asset often has different prices depending on the exchange.

Domestically, the difference between exchanges can be several tens of thousands of yen. When countries differ, the gap can be even larger.

By buying Bitcoin at the cheaper B exchange and sending it to the highest-priced A exchange to sell, you can achieve more profit than selling on the B exchange.

• Drawbacks

Even if you’re not familiar with charts, if you monitor exchange prices it may look easy to profit, but prices can fluctuate while you’re transferring Bitcoin or other cryptocurrencies to another exchange.

“Profit without moving cryptocurrencies”

For arbitrage trading, it is mandatory to register with several exchanges.

For example, if you perform arbitrage trading with two exchanges, the preparation would be to fund Bitcoin and cash in both BitFlyer and Zaif accounts.

For example, prepare 0.1 BTC of Bitcoin and 200,000 yen in cash in both accounts.

If you are using more exchanges, you would need even more funds. Arbitrage trading requires capital, so don’t overextend yourself.

Also, when buying and selling, using limit orders rather than market orders can reduce the risk of adverse price movement.

If you’re a beginner who has never used a limit order, when placing a limit order aim slightly above the lowest price and slightly below the highest price to improve the chance of getting filled.

① First, Zaif had the higher price, so sell 0.1 BTC at 191,000 yen. Bitbank buys at 185,295 yen for 0.1 BTC.

The following table shows the results.

From the table, ownership of 0.2 BTC does not change. Adding up the total cash now becomes 405,705 yen.

The cash prepared at the start, combined, was 400,000 yen. In other words, there was a profit of 5,705 yen.

“Can we increase earnings?”

As the table above shows, arbitrage requires initial investment.

You might think the profits are small relative to the initial investment.

So how can your profits be increased? One way is to increase the initial investment, which can also raise profits.

Another way is to register with multiple exchanges to increase accounts. The above is arbitrage between two exchanges, so one side must outperform the other for it to make sense.

Therefore, by expanding to four or five accounts and depositing the same amounts of BTC and cash into every account, opportunities to sell at the lowest price or buy at the highest price will occur more frequently.

Fees for each exchange

If you want to trade more broadly, it may be good to register with large overseas exchanges popular among Japanese users, such as Binance, Bitfinex, KuCoin, and BitMEX.

“Collecting price differences between exchanges”

Price information from exchanges is crucial for arbitrage above all else.

However, you cannot visit each exchange’s site individually. Here is a site that lets you check at a glance.

・Everyone’s Cryptocurrency:https://cc.minkabu.jp/pair/BTC_JPY

This site displays the buy and sell prices from major exchanges, so you can quickly see the price differences between exchanges.

“If you want to do arbitrage more seriously, use automated trading”

Arbitrage requires initial costs, and you need to discern price differences across multiple exchanges to profit efficiently.

Therefore, human inspection has its limits. If you increase the number of exchanges you compare, the verification work can take a lot of time.

Thus, for serious arbitrage earnings, monitoring price differences with a computer and placing orders automatically is the most efficient approach.

Specialized arbitrage traders program a system to automatically trigger orders once a preset price difference arises.

This is a technique for advanced users with extensive knowledge, but there is a system that can perform full automation

without requiring knowledge, making it easy for beginners to use.

“Summary of arbitrage without moving assets”

If you want to maximize profits from arbitrage, the key is to register with multiple exchanges and trade across them.

Initial investments are somewhat necessary, but since you sell on the higher-priced exchange, you are not subject to rapid price fluctuations,

almost risk-free trading.

Take advantage of these benefits and give it a proper challenge.

Details of the arbitrage system products are here