Do you trade arbitrage? When I first entered the crypto market, arbitrage trading was my favourite. So what is crypto arbitrage and how does it work? Let's examine briefly. #threadstorm
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Do you trade arbitrage? When I first entered the crypto market, arbitrage trading was my favourite. So what is crypto arbitrage and how does it work? Let's examine briefly. #threadstorm
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No, I don't do it, as there are bots who are far better at this and also AI is coming in close strongly. I'm a holder, and in for the long for the long time, as time in market beats timing the market.
I'm also a long-term investor, but I used to like arbitrage trading, but nowadays I don't much prefer it.
actually i tried it once and it wasn’t successful so i didn’t like that much. Prefer trading spot the safest
Margin trading is very risky. I lost a lot of money in margin trading. Now I left trading.
Certainly margin trading is very risky.
The safe way is the best. Nowadays, it is necessary to be very fast to make a profit with arbitrage trading.
I don't arb, but if I had some coding knowledge to make it happen, I would definitely have a couple of bots, but never gonna do it manually, not at this day and age.
Doing it manually is both very laborious and difficult. Also, I think AI will be used a lot in arbitrage trade in the future.
Arbitrage is a trading strategy in which a crypto is bought in one market and immediately sold at a higher price in another market, and the price difference is exploited to profit.
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Means buy from one exchange and sold in another exchange?
Yes that's right. But this is only one of the methods.
First of all, I would like to point out that; The risks in arbitrage trading are slippage, sudden price movements and transfer fees.
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Yes, I also think that transfer fees and slippage are the main problems in arbitrage trading.
That's right
When I first entered the crypto market, the transfer fees were not very high and the price difference of a crypto between exchanges could be high, so I did not have to rush to sell. But..
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Everything change with time. Is arbitrage trading profitable until now?
I can say that triple arbitrage is more profitable, but it is necessary to be experienced to see the opportunities here. Also, DeFi offers more opportunities.
But nowadays speed is the name of the game in arbitrage trading. Otherwise it is very difficult to get profit.
I used to buy a crypto on one exchange and transfer it to another exchange and sell it there for a higher price.
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It looks very attractive. Buy from one exchange and sell on another exchange. Is even a beginner can make profit by this strategy?
Too risky for beginners. Although it may seem easy, it is difficult in practice.
Yes I got it. Thanks for your explanation.
The difference would be my profit, but this method doesn't work very well nowadays. Because the price differences do not last as long as before. For example; while the price of Bitcoin changes in seconds, transfers can take minutes.
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I got it. It is not as profitable as I am thinking. It is risky also, If during transfer price decrease than we have lost.
Exactly so
That increases the risk. It is also necessary to consider the high transfer fees.
Some crypto trading experts can advantage from arbitrage trading as follows; they hold both crypto and cash (stablecoin) on two different exchanges.
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And when they see the price difference, they buy btc with their cash on the x exchange and sell their btc on the y exchange.
Another method is triangle arbitrage, which is based on trading three different cryptocurrencies.
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The trader can see opportunities in the prices of three different cryptocurrencies. One or more of these cryptocurrencies may be undervalued on the stock market, and traders turn this into an opportunity.
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Another method is statistical arbitrage. This is the most difficult but more useful. Investors use bots in statistical arbitrage. The bot runs based on a mathematical model and..
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they carefully calculate the probability of profiting from a trade and can trade hundreds of different cryptocurrencies simultaneously. Imagine using artificial intelligence in statistical arbitrage in the future.
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Decentralized Finance (DeFi) works without human intervention and is more suitable for arbitrage trading. Their code-heavy architecture makes them perfect for arbitrage.
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To give a simple example; Investors aim to profit from the various yield offered by DeFi lending protocols.
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For example, if one platform offers 15% yield from a stablecoin and and another offers 20% yield from a different stablecoin, a trader can earn that extra 5% by converting their low-yield stablecoin to a high-yield stablecoin.
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I would like to point out that there are serious risks in arbitrage trading, serious money can be lost in any slippage.
Do you trade arbitrage? And do you know of a different method?
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