What’s Arbitrage Trading
ARBITRAGE TRADING: Simply means buying a foreign currency (USD, EURO, CAD, or AUD) from an Exchange where it’s cheap and selling it at a high price within a short time to make a profit. WHAT DO I MEAN BY THAT? An obvious example: On Amazon, you buy iPhone 13 for $1000 while in Aliexpress it’s sold for $1,300 The iPhone 13 you buy on Amazon for $1,000 is the same as the one they are selling for $1,300 on Aliexpress right? Also with the same quality and color, just the difference is the price, So as an “Arbitrage Trader”, let’s say you buy 10 iPhone 13 from Amazon for $1,000 each, for every 10 iPhone 13 the price will be $10,000. So go and sell them for $1,300 each it will cost $13,000. According to this calculation, you will get a profit of $3,000.
But before you start investing in this business you need to consider a few things. the amount that will cost you to list/post your product on the Advertising website same as the transaction fee for every transaction with no problem, how many days does it take to before your product got sold? Etc. Everything I have described needs to be carefully monitored to avoid any loss in this business. It seems to me that everything is listed. Ultimately you are expected to survive with at least 10% of your Investment.
Based on my research we have two Arbitrage that our fellow traders are famous for:
1. Arbitrage with Credit/Debit Cards: this is one that we use to buy USD at a Bank rate using credit/debit cards, in other to sell it at a Black Market price like Binance P2P.
2. Arbitrage between two or more Exchanges (Cryptocurrency markets). CREDIT/DEBIT CARDS ARBITRAGE: sometimes your friends will ask to bring your credit/debit cards either Visa or Master card to use and trade, after the transaction was successful they will give you, your percentage of $50, $100, or $150, or $200 depending on the profit earned. Have you ever asked yourself what is going on? The point is, every credit/debit card has a limit every month you have the opportunity to buy $100 with it depending on your bank limit especially in African countries the deposit of $100 is their monthly limit, and mostly $1/570.
So this is $100 if you take it to Black Market you will sell it for $1/570 or $1 for 560 or? If you look closely you will find that there is a profit of about 8,000 points right? So what is happening as I explained earlier about buying an iPhone 13 from Amazon, So here too, as there are some mediums to follow, and then there are charges, where most of the profits go. But in the end, you will get a profit of 500pt, 400pt, or 300pt. It just depends on the market conditions at the time. In short, this is what we called ARBITRAGE BETWEEN EXCHANGES.
ARBITRAGE TRADING BETWEEN CRYPTOCURRENCY MARKETS:
The Dollar exchange rate difference between Cryptocurrency markets, finally we say if you can convert your Currency into dollars right?
Q: Can I buy coins now like TRON from Binance and transfer them to Crypto.com and sell it to make a profit because of the differences between them in USD?
Answer: It is not possible, because if you are going to deposit in Binance or Kucoin you have to buy USDT in P2P, which is also expensive USDT unless you use your credit card in depositing. Else you will end up in a loss without gaining any profit because of the Fees you will be charged in P2P especially the restricted countries that cannot use their credit/Debit cards to fund their wallet.
If you want to get the most out of it, change your Currency in Binance to USD, change your currency from Crypto.com also to USD, and see if you can set the price difference. Not, back there is something negligible.
WHAT KIND OF ARBITRAGE TRADING IS BETWEEN CRYPTOCURRENCY MARKETS?
Arbitrage is done between Cryptocurrency Markets when there is a difference in the price of one coin in them, and the price varies between the two markets For Example: In the BNB KUCOINS market it is $ 350 if you look at the COIN TIGER Market it is $ 355. Is there a gap of $ 5 in between? Then let’s say we buy two at KUCOIN for $ 700 and sell at COIN TIGER for $ 710 to get $ 10.
Let’s save this we will talk about that later. Because I want to show you all the most important things that every person has to look at before he even puts his money in Arbitrage.
WHAT CAUSES COIN DIFFERENCES BETWEEN MARKETS?
As we all know we have several Cryptocurrency markets in the world (400+ if I remember correctly). There is a difference between them in terms of Trading Volume. This results in what we call Demand and Supply operating in a market whose prices are slightly different from other markets for a while.
Finally, you should know that the difference between the Cryptocurrency markets is not huge, sometimes you will find out it’s not much, but the amount of money to be invested will make up the difference. So this difference has given you a chance to make a profit. With this strategy, I am telling you the truth this Arbitrage of $ 100 or $ 200 is not enough for you to start trading. That’s why now a person needs to start to seek the knowledge of the first method that we explained about it, this method is the best strategy to start making money with a small investment like mine.
ARBITRAGE TRADING BETWEEN CRYPTOCURRENCY MARKETS
Arbitrage trading that is working between Exchanges often does not mean you should wait for someone to give you a signal, you need to be researching and combining the prices between different exchangers, search between Cryptocurrency markets, and check the Coin’s prices in them, God willing you match a coin that got a price difference between the two Exchanges. Often the difference is not permanent, it only lasts for a few hours, and then you take advantage of this opportunity to make your profit.
There is a COINGAPP Application that some people use to check the Coin price difference between Exchanges for them to perform Arbitrage. But it is not given an 80% signal on it, because sometimes one of the Exchanges has a temporary restricted deposit or Withdrawal (I guess because of the number of people using it, that is why one of the markets is detecting and restricting the funding and withdrawal for a while). That’s Why I advise a person to do it himself. If you make your research and you find a very profitable site before people have noticed it you will make your first million. 😎
And if you can calculate well, You can also use Shitcoin but it’s not recommended. For me, I’m seeing more opportunities in them but first calculate everything very well before you even deposit your money (For example: check out the Order book in the two Exchanges to see no problem, with the charges at withdrawal and deposit, because Shitcoin is charged at deposit even after Withdrawal, some 5% some 10% some up to 15%) because they are so cheap, immediately once the price raises you already make a profit. About 5 months ago I buy AQUAGOAT at Hotbit I sell at Bitmart. If I buy for $ 200 I get about $ 13. I did it three times. I double the profit. 😂 Later Bitmart’s order book stopped functioning then I left.
Sometimes you can luckily find a token in Pancakeswap to buy and sell on the Exchange, 5 months ago I use to buy EMPIRE at Pancakeswap and sell them on COIN TIGER, but also later the Book COIN TIGER was damaged. ( Actually last two weeks I’m not trading Arbitrage because it takes time before you detect the Coin and you get the price difference between Exchanges).
HERE IS WHAT I WANT TO SAY?
There are some things you need to take care of before you even invest your money in Arbitrage.
- This Arbitrage between Exchanges takes time before finding the Coin/Token you are going to trade it.
- It costs a lot of money because even a person with $200 capital will be difficult for him to make a good profit.
- You need to have several Cryptocurrency Exchange accounts and make sure that they are all Verified.
- Make sure you know how to use Exchanges properly and make sure you can read the Order Book perfectly.
- Make sure you pay attention to the fees that are going to charge you for deposit and Withdrawal if it’s Shitcoin.
- Take care of the network/Blockchain that this coin is on. I usually recommend using BEP20.
- Calculate everything on your jotter book before you invest your money, if you discovered there is a profit then do it.