I have observed different crypto exchanges for quite some time now and analyzed the potential for different kinds of arbitrage. However, I don't quite understand what I am seeing.


  1. Observing Poloniex and Binance web socket streams for the same symbol, it seems like most of the time Poloniex lags behind Binance but it generally moves the same way. Interestingly, these price movements occur without any (visible) trades happening. What could cause this effect? Who makes money from this if there are no trades?
  2. Triangular arbitrage rarely seems profitable within one exchange. I would expect that multiple symbols on a smaller exchange like Poloniex would need some time to return to balance after a major price movement. However, it seems like markets adjust faster than the real-time web socket API will let me look at the situation (1ms latency).

The attached image (sorry, didn't find a bigger one in my files) shows Binance (blue) and Poloniex (green) prices moving. There are no trades on Poloniex during this time.

enter image description here


2 Answers 2


My understanding is that prices displayed on exchanges is not based solely on the last filed order, but also on the existing orders, which change constantly as traders manually and automatically move their orders up and down. Given enough traders, we can expect that they examine and perhaps participate in other exchanges. Some trying to make arbitrage like you and others just trying to feel informed. Thus, we can expect that traders change their open orders on all the exchanges that they participate in, but based off their impression of price/value in reality, not just the published price on any individual exchange.

Theoretically it would seem possible that a perfect storm of too few traders that are also ignorant of price changes on other exchanges might not change their orders, leaving price on that exchange unchanged while it rapidly moves on others. In my opinion, such rare instances are really the only opportunity for arbitrage to be profitably worthwhile. The whole point of a published price is to be as close to public perception as is possible. Should a new up-and-coming exchange fail horribly in that regard, they would lose trust of the few traders they already have.


Well... All of the top crypto exchanges like Binance have their inner arbitrage system. They may execute the best orders without putting them in the order book. They take the best arbitrage opportunities. So regular users like you and me can't benefit from such orders. This inner arbitrage is very profitable for the exchanges.

Maybe this is why you see what you see.

Actually, most of the top exchanges work like "Grey Boxes". We don't know what's happening inside... But they take all the best oportunities anyway.

  • Thanks for your answer. I have considered this option as well. Do you have any sources to support these claims?
    – Johannes
    Apr 15, 2021 at 18:04
  • Yeah, I know a founder of 50x.com crypto exchange. He is a very smart developer. He knows about crypto exchanges a lot. He has developed the first Any-to-Any crypto exchange in the world. Here is my referral link: go.50x.com/60797 He told me about inner arbitrage a lot. Apr 18, 2021 at 7:57
  • He told me all these things about this "inner" arbitrage. By the way, such arbitrage is impossible on 50x.com because the trading core of the exchange always "seeks" for better execution opportunities itself. A user always gets the best possible order execution. Apr 18, 2021 at 8:03

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