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Arbitrage - What it is and how it works Arbitrage refers to the process of instantly trading one or more pairs of currencies or odds for a nigh risk-free profit. Usually, this involves two exchanges (this is then called a two-legged arbitrage); although more are, of course, possible. There are several steps when executing an arbitrage: Find a suitable ...


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One of the major reasons standing in the way of profiting from arbitrage opportunities has to do with "volume". The volume for either exchanges is not high enough yet to support big trades. Large profits require large trades (in arbitrage). Making $1,000 may be feasible between exchanges, but that's an extreme best case scenario and using 10k in capital! ...


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Observations Mt.Gox is currently offering neither fiat withdrawals, nor Bitcoin withdrawals. No withdrawals means that the Mt.Gox price is completely decoupled from the Bitcoin market, as there can be no arbitrage to close the gap. Precursors Mt.Gox has handled the Malleable Transaction issue poorly, and squandered the trust of a lot of its users. ...


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Something I am currently looking into, and a huge issue that nobody has really mentioned earlier is blockchain time. 1) Bitcoin is traded on a number of exchanges, however the entire process of buying on one exchange, transferring to another exchange and selling on that second exchange can take on the order of magnitude of 30 minutes(~10 minutes per block ...


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To be more specific about the "arbitrage strategies" in Tanmay's answer: Suppose there were a difference in price between two exchanges: at A the price is $10,000 and at B it is $10,100. Then, in principle, someone could turn a quick and risk-free(*) profit by buying coins on A, transferring them to B, and selling them for the higher price. This is called ...


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Sure it's legal. Unless either country has outright banned buying/selling Bitcoins. I don't think there's any country that has gone that far. You may have to report income/profit/trades to your tax office, depending on local laws. In some countries you may need to pay VAT as well. Setting up accounts with (foreign) exchanges means that you are entrusting ...


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The formula for sell_order_Net_total will be: sell_order_Net_total = sell_amount * sell_price * (1- sell_ex_txn_fee) The final profit: Profit = sell_order_Net_total - buy_order_Net_total Keep in mind that there are also transaction fees between the two exchanges. If you have traded all your DOGEs for BTC on 1 exchange, and BTC for DOGEs on the other, ...


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First, to clear things up, it isn't up to the exchange to quote a certain price/rate. It's all up to the users of that exchange what they ask/bid for a bitcoin. For example there are two exchanges, X and Y, with both have an ask one 500 USD and a bid on 400 USD. Then person A bids a higher price, lets say 470 (instead of 400), on exchange X. Person B asks a ...


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To answer your first question: I do not know any free, opensource, trusted software that arbitrages for you. It will not generate any money for the developers, and only depletes their source of income. To calculate the profit in arbitrage you first have to know all the steps: Buy a Bitcoin for $600 (rate #1) on exchange A (trading fee #1) Send this ...


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I have been wondering about it myself for a long time now. I even thought of developing trading software (bot) that would automatically buy on one exchange and sell on MtGox. The price difference between BTC-e and MtGox can be as high as $100/BTC. The problem is how to get your cash (US$) out of MtGox? Last time I tried, I waited - in vain - for almost 5 ...


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As my comment says, if you were to buy any BTC on Mt. Gox, you have no way of transferring it elsewhere or spending it. All outbound transfers are turned off, and people have no way of knowing if or when transfers will resume. There's a belief that Mt. Gox is insolvent or will be shortly. Whether that is true remains to be seen. But if Mt. Gox does indeed ...


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There are multiple distinct types of arbitrage possible with Ripple (there may or may not be financial terms for these, I'm a software developer not a finance person). Within Ripple Ripple has a built-in exchange between any pair of currency+issuer. Depending on market conditions it's possible to find arbitrage opportunities that can executed near ...


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It is a well-known observation that Bitcoin exchanges are not efficient (in the academic sense of well-approximating what you call the No Arbitrage Rule). The reason is simply that there are real world barriers that academics usually assume not to be present. If you do consider the risk associated with depositing funds at a Bitcoin exchange, there is an ...


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Well for one, it's almost impossible to get money off of Mt.Gox. (I had a wire transfer pending for 3 months and finally decided to just cancel it and take the loss.) Some bitcoin exchanges refuse to do business with the US (btc-e) and some only do business with the US (coinbase). Bank transfers are not cheep and the exchanges take a somewhat large fee for ...


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Yes and still at it full time. I have created a monitor that calculates the spread in % between several exchanges. Sometimes we see 25% spread! Those are the moments and getting fiat back from one exchange to another is bottleneck.


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If the spread is $40 you will buy $1 above ask price, then when fulfilled immediately resell the btc at $1 below bid price. You keep $38 profit per btc


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You should never deposit your coin to an exchange when the deposit function is disabled, your transaction will either be delayed or just gone.


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Arbitrage is a race: a good arbitrage bot will take advantage of differences in price, before anyone else is able to. By performing the arbitrage trading, the difference in price will disappear, so only the fastest traders will be able to profit. So with this in mind, I am extremely skeptical of any arbitrage bot that is being publicly sold, as the user ...


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There are a lot of traders who are are running arbitrage strategies. The whole premise is that, if the value of BTC relative to USD increases/decreases on one exchange due to a short term decrease/increase of supply, it should reflect on the other exchanges too (since at the end of the day, BTC is BTC regardless of what exchange it is being traded on). So ...


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imo i have started a week ago and did some testing on various platforms. my issue is im using cryptopia as a base of info and i noticed i see some incredible deals available but by the time i send btc to for example then buy said coin cheap, then send to cryptopia? forget it. takes hours and hours to even show up as a deposit then depends which coin becuse ...


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I don't have enough rep to comment on Robert's answer but to clarify what he was saying would be that you would put limit orders in front of all the other orders available on the current order book. You would not be able to execute any order "immediately" as you would then be making a market order. Now, this is how most exchanges work for currency trading, ...


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Yes, there are such services. bitcoincharts.com offers such an overview, though you may get confused from the many fiat currencies. CoinDesk's chart is much cleaner, only uses USD, and you can easily choose which exchanges to regard. However, CoinDesk lists far fewer exchanges than bitcoincharts.com. There are several services – for example BitcoinAverage ...


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If you want to make money on arbitrage like this, you should have reserves on both exchanges, and at the moment when you are buying in btc-e, you should sell at cryptsy (for example). Otherwise te price can change to "wrong" direction when you are transfering bitcoins from btc-e to cryptsy or vice versa. Also, you should understand how to withdraw/deposit ...


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To answer your question let me give you an example of what some people do in order to try and take advantage of market arbitrage with Bitcoin. As you know, Bitstamp and BTC-E are two of the biggest exchanges that are trading Bitcoin. If you look at the BTC price on BTC-E you can see it is always lower than that of Bitstamp. If you were to go to Russia (or ...


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It's easy to transfer cryptocurrencies between exchanges, but there is no way to transfer USD without withdrawing to your bank account or some kind of e-wallet first. All exchanges I've seen do not allow withdrawals to third parties.


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As explained by http://www.investopedia.com/terms/p/profit.asp: profit = total revenue - total expenses or in plain English: profit = (what you had received after selling all your coins) - (what you had paid to buy your coins) so, for example: If you had spent $1000 for Bitcoin priced at $500/BTC on exchange A, and say the fee is 1%, you will received ...


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Case #1 wouldn't be arbitrage because it takes so long to transfer coins between exchanges. Arbitrage by definition is risk free profit due to pricing differentials. Sure some may be willing to say being exposed to the market for a second or two isnt particularly risky and should qualify as arbitrage, but it takes a lot longer than a few seconds to transfer ...


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CEX.IO has BTC/LTC, BTC/NMC, BTC/GHS, and NMC/GHS trading with low minimums and no trade fee. As noted before, the downward trend in altcoins relative to BTC means you will be better off to buy and hold BTC. Also, volume is low enough that if you try to move more than a small amount you can push the price around enough to ruin the arbitrage opportunity you ...


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Both are possible; in fact, I do both when the opportunity arises. For #1, for example, I have successfully conducted an arbitrage on UTC, by buying in at Crypto Rush for 0.00018 and selling it on Mintpal for 0.00019. You definitely have some risk here of not executing the trade quickly enough, so look for markets that are reasonably liquid (i.e. relatively ...


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No it would not. Due to fees involved with transferring assets between exchanges, and exchange commissions, inter-exchange spreads would still exist. Everyone running bots would at best lower spreads, not eliminate them.


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