How to Start Making Money from Crypto Arbitrage
Step #1: Find your first candidate exchanges
Don't worry. You can add or change your exchanges whenever you like.
Step #2: Research the reputations and fees of candidates
Carefully check the reputation of any exchange before you do business. Some great sources of information about exchanges:
Here's how to evaluate exchanges.
Regularly review your current choices.
Step #3: Choose your first exchanges
Only accept exchanges with:
- Great prices. Here are the exchanges with the best prices right now. No exchange has both great buy prices and sell prices at the same time. They would lose money
You want to buy from one exchange for a low buy price. Then quickly sell to another exchange at a high sell price. Choose some exchanges for buy prices, and some for sell prices
To get the best deals, you need to see prices from as many exchanges as you can.
- Good reputation. Review your reputation research for warnings. Withdrawal delays and frozen accounts are bad news.
- Low fees. Low fees are critical. Sometimes your total expenses are more than you would make on a trade. Of course you don't make that trade. Every expense makes it harder to make money. Exchange fees are usually your biggest expense. Track all your expenses. Lower them as much as you can.
Low fee exchanges are generally a better choice. But be sure you understand how they make their money. For example, they may make money by lending to you. Using borrowed money greatly increases your risk. It's also a huge expense that can make you miss otherwise good trades.
Step #4: Open accounts with minimum deposits
Make minimum deposits at the exchanges you choose. Restrict the money you put at risk until you have confidence in the exchange.
Of course, don't invest more than you are willing to lose. Never give all your capital to a single exchange.
Step #5: Tell TopArb Trader where you've opened accounts
For maximum privacy, you can skip this step and place your orders directly using the different exchange apps. It's more complex but more private.
TopArb Trader is a single app for almost all exchanges. You don't have to learn a different app for every exchange. TopArb works with all of your accounts. Just select any exchange where you have a trading account and place your orders.
TopArb never has your money. That's between you and your exchanges.
Your account credentials are only stored on your own system. TopArb does not have them. We don't track how much you buy, sell or which currencies you trade.
Step #6: Test with small trades
Use limit orders and start with small transactions.
Some exchanges play games. Occasionally it's extreme, like switching a Buy order to a Sell order. Make small trades until you are confident that the exchange handles your orders as you expect.
Step #7: Grow deposits and trades as trust grows
If you need to buy or sell a large amount, do it in parallel at different exchanges. If you must use a single exchange, do it in smaller increments.
Before you send or receive a large amount, always move a small amount first using all the same data. If things don't go perfectly, everyone will be calmer.
Leave as little as you can on deposit at any exchange. Consider a reputable escrow agent for larger amounts.
Step #8: Evaluate each opportunity carefully
A trade is good if you trust the exchanges and you are likely to make money. You are likely to make money if the gross profit you expect to make on the trade is more than all your expenses added together. The total of all your expenses for a trade is called "carrying cost".
If you borrow money for a trade, that's usually your biggest cost. These loans are called "margin", "leverage" or "gearing".
Be sure to consider all expenses. Exchanges can get creative with fees: deposit, transaction, trading, network, wire, foreign exchange, withdrawal, etc. Of course your gross profit has to be higher than your total expenses.
Prices may change between the time you place your order and when it is executed. There may be unexpected delays or small movements in price. This "slippage" is normal. Limit orders, which are only executed at a price you specify, greatly reduce slippage risk. TopArb Trader defaults to limit orders.
Step #9: Don't trade with borrowed money
Trading with borrowed money greatly increases your potential profit and your potential risk. By any name, it's a loan. It's also an extra expense that makes you miss otherwise good trades.
Let's make sure you understand the risks.
When an exchange lets you trade on margin, its losses are just on paper until you withdraw your profit. But when you lose, they can seize anything you own. Your real estate, cars, accounts. Whatever they can reach. That means loans are a huge money maker for exchanges. Usually it's a terrible deal for you. Of course exchanges know this. That's why they call it "margin", "leverage", or "gearing" instead of a loan.
If you have a margin account, that's very likely your biggest expense. That extra expense makes you miss out on a lot of otherwise good trades. You can't make the trade because your expenses are higher than your gross profit.
Some trading businesses trick you into trading on margin.
Unless you really know what you're doing, don't pick an exchange just because of their margin trading. For the vast majority of traders, borrowed money is a very bad idea.
Step #10: You're ready to make money
Trade as fast as you can. Stay careful. But take advantage of every good trade as soon as you can.
A single crypto arbitrage trade may not make much. But it's safer because you know your buy and sell prices in advance.
And crypto arbitrage trades are usually complete in hours or days. So with arbitrage, you can trade frequently with much less risk than traditional trading.
When you trade more frequently, compounding undergoes a magical transformation. You get more compounding periods in the same calendar time.
Your money can grow fast.
Just ask. We're eager to help you succeed.