Risks

Risks are part of any investment. Trading cryptocurrency is not an exception. Crypto arbitrage has almost no price risk, but there are still smaller risks.

Whenever practical, we work hard to leave your money and private information in your hands, not ours. This protects you and makes us less of a target.

Our liability

By using the TopArb services you agree that TopArb has no liability to you. This limitation of liability is without limitation except to the degree required by law.

The basics

  • Learn as much as possible before you invest.
  • Never invest more than you are willing to lose.
  • If you invest borrowed money ("margin", "leverage", "gearing"), you can lose more than your initial investment.

TopArb is your private trading platform

TopArb lets you execute trades yourself directly with the exchanges. This greatly increases your privacy. We don't collect trade and portfolio data. Thieves targeting our servers can't get that private data from us, because we don't have it.

TopArb is not an exchange

TopArb does not accept your money for investment, execute your trades, finance your margin trades, or guide your investment in any way beyond comparing advertised prices and arbitrage opportunities.

Because we're not an exchange, you don't deposit any of your investment funds with us. We don't have your money so we can't lose it. Because we do not execute your trades, we can't do the bad things some exchanges do, such as churning and front running.

High returns strongly imply high risk

Arbitrage probably has the highest risk-adjusted returns available. But high returns strongly imply high risk. Arbitrage reduces your risk in very important ways, such as your buying and selling price. But every investment has risks.

Counterparty Risk

The biggest risk for TopArb customers is counterparty risk. This is the risk that a counterparty may fail to fulfill their side of a transaction. In bitcoin cross-exchange arbitrage your counterparties are the exchanges. A great learning resource is Counterparty Credit Risk by Jon Gregory.

If you use an exchange in another country, that exchange isn't subject to your local laws or courts. You can't easily sue a counterparty in a bitcoin cross-exchange arbitrage. If you lose your money there is often little legal recourse. Because you usually can't rely on legal protection, you have to protect yourself.

Other Risks

Arbitrage execution risk, a type of market risk, is because prices may change on one market before both transactions in an arbitrage are complete. In practice you can't execute two trades at the exact same instant. Prices can change during the delay. Your selling price may drop below your buying price. Some change and delay, called slippage, is normal. If you buy and for some reason you can't sell right away, then you are in an unhedged position.

Liquidity risk occurs if you buy using borrowed money. Other names for investing with borrowed money are leverage, margin, and gearing. With borrowed money your returns can be greater than if you use your own money. But as usual high returns imply high risks. Leveraged investments are the most common way for expert investors to lose all their money.

Personality risk includes addiction, especially gambling addiction. Strong emotions of any kind often result in bad trading decisions.

Software risk is because software has bugs. A bug in a bot can wipe you out quickly without your knowing. With TopArb Trader you are in control of each trade. It's also possible that someone could distribute malware through us.

These are not all the risks. There is no known way to protect yourself completely. If you have suggestions on how we can reduce your risk, let us know.