Cross-exchange arbitrage: What it is and how it works
Arbitrage is the safest way to make a lot of money without waiting decades. It's profiting from a difference in prices of the same item. You buy from a low market and quickly sell to a high market.
You know the prices are in your favor. Arbitrage is the safest way to make a lot of money. Now it's easier than it's ever been. Before you buy, you already know your sell price. You know who will buy from you. You buy and sell at almost the same time. You don't have to wait for the price to move. You take your profit now.
More speed. "Buy low and sell high" is what every business does. Exporters and importers do it across markets, slowly. Online arbitrage is much faster. Hedge funds have been quietly reaping profits from arb for years.
More opportunities. Cryptocurrencies have created completely new arbitrage opportunities. There are many exchanges. They all have different prices, often very different. They are online. Transactions happen lightning fast by historical standards.
The real secret is fast growth.
Accelerated compound interest.
The biggest benefit is that your money compounds fast, over and over.
Your trades are usually complete in hours or days, not in weeks or months.
Sometimes just in minutes.
That means you can reinvest your money many more times each year.
The results are so astonishing we recommend you calculate your rate of return yourself to believe it.
Calculate your annual returns for yourself
Pro Tip: 2% wins are much better than 4%. There are many, many more opportunities at 2%. Every one you take is a compounding period. You want to reinvest as frequently as possible.
Or choose income. If you want income rather than growth, you can try to find any other option with similar returns and lower risks. Arbitrage is work, but it may be the best job in finance. Work anywhere. Anytime. As much or as little as you like. For yourself, or for your company.
How cross-exchange arbitrage works:
- Find the opportunities.
- Buy bitcoin at an exchange where the price is low.
- Move your bitcoin to an exchange where the price is high.
- Sell the bitcoin and pocket your profit.
With TopArb Trader, the whole process can happen in minutes under your guidance.
Let TopArb Trader's crypto bot find the opportunities for you. Without software this takes so much time that the best trades are gone.
One crystal clear app for almost all exchanges. Don't take the risk of switching to a wildly different trading platform for each exchange. That leads to confusion and expensive errors. Just use TopArb's single simple app for all your exchanges.
High Speed Trading (HST) doesn't matter. You may hear the old myth that arbitrage only works with HST. When HST works price differences disappear, and you can see that's not happening. HST needs a machine physically very close to both exchanges in a cross-exchange trade. Because there are so many crypto exchanges in distant regions, cross-exchange HST doesn't work very well.
Charts don't matter with arbitrage. Trends up or down, you don't care. Instead TopArb continuously monitors and analyzes thousands of possible trades right now between each pair of exchanges. You get the best arbitrage opportunities in seconds.
The Bitcoin "price" doesn't matter. The single "price" you see in the media is almost always a quote from just one exchange. Every exchange has its own prices, and they change constantly. It doesn't matter if the price is going up or down. Volatility is an advantage, not a problem. It increases your profit.
What really matters is now you know the prices are in your favor. You can buy low and sell high, fast. Then do it again over and over.
So why isn't every Bitcoin investor a billionaire?
- Not everyone knows how arbitrage works.
- Most trading apps support just one exchange. There are almost all exchanges.
- If you only trade with the most popular exchanges, you are likely to lose money
- Like stocks, not all exchanges are great. You have to learn how to pick exchanges.
- Transactions can sometimes take a lot longer than expected.
- When you go to or from fiat currency, there can be huge delays.
- The biggest delays are from AML (Anti-Money-Laundering) and KYC (Know Your Customer) laws.
- If you dismiss trades that take more than a few minutes, you miss many of the best opportunities.
- There's always slippage to cut your profit.
- Service and withdrawal fees from some exchanges can kill any profit.
- Some exchanges hate arbitrage. They want captive traders, and may work to slow or stop you.
- Arbitrage is less exciting. If you like high risk, this isn't it.
You can bypass or mitigate all these issues. For example, you can detect front running at exchanges by tracking how much slippage is in your favor. A workaround for many AML/KYC delays is to use unregulated exchanges. Remember, regulated definitely does not mean insured. Unregulated often simply means the exchange doesn't trade US dollars. Just keep your trades in cryptocurrencies as long as possible. If you end up with fiat at an exchange in a restrictive country, remember cryptocurrencies are designed to move money easily. Moving fiat is the same process as a trade for profit, but easier because the goal is to break even.
Arbitrage is very different from investing in stocks.
| Stocks | Cryptocurrency arbitrage |
| Few exchanges | Many exchanges |
| Pick stocks | Pick exchanges |
| Biggest risk is price risk | Know your buy and sell prices in advance |
| Brokerage required | Direct trade with exchanges |
| Heavily regulated | Generally unregulated |
| Volatility increases price risk | Low price risk means volatility increases profits |
| Stock index funds are low risk and low return | Probably best risk-adjusted returns publicly available |
The risks are very different. Some terms aren't quite the same. The spread isn't just the difference between bids and asks on a single exchange, but between the buy price on one exchange and the sell price on another. A trade usually refers to a round trip trade, including both buying and selling. There is almost no price risk, so when volatility increases spreads, it increases profit.
More profit. Faster. Less risk. Arbitrage has rarely been this profitable. It's never been this easy.