People in the currency circle know that the way to make money here is not only to fry coins and dig mines, but also to achieve arbitrage in some ways. It can also obtain certain profits in the short term. Although the amount obtained is not very high, it is also a fast way to make money. method.
What is Digital Currency Arbitrage
Buying the same asset on different platforms and selling it on another platform at a higher price, the difference earned is arbitrage. This method has existed for a long time in the foreign exchange market, but due to the large-scale development of the quantitative system, arbitrage can no longer be achieved, but digital currency can.
In most cases, large exchanges with high trading volumes will guide the digital currency prices of small exchanges with less volume, but exchange prices are always changing. This is where digital currency can arbitrage.
How to Implement Digital Currency Arbitrage
For white white, the easiest way is to monitor it manually. Select a digital currency, monitor their prices on different exchanges, and arbitrage when a certain difference is generated.
In addition, there are some arbitrage robots that save the time and effort of manual monitoring and can easily implement arbitrage.
1. Spread arbitrage
Using spreads to arbitrage takes into account the cost of digital currency storage and the time it takes to transfer digital currency. The lower the cost, the less time it takes.
It should be noted that arbitrage depends to a large extent on the time consumed. If a large amount of time is required to confirm during the transaction, there is a certain risk, because there is no guarantee that during this time, The price of the currency will not change.
2. Transnational arbitrage
The price of a digital currency will also vary from country to country. Bitcoin prices in Zimbabwe soared last year, giving many people the opportunity to buy Bitcoin from different national exchanges and sell it on Zimbabwe exchanges.
This approach, in addition to the opportunity it requires, should be approached with caution in order to avoid unnecessary complications.
3. Hit new arbitrage
After a currency is listed on an exchange, the demand for it will inevitably increase. When a digital currency is listed on a large exchange, its value will gradually increase. At this time, it can be sold from some small exchanges and it can earn the difference.
Arbitrage strategy
1. Convergence arbitrage
This strategy is similar to pricing arbitrage. That is, using the difference in trading prices, buy on the exchange where the digital currency price is lower and sell on the higher price exchange.
2. Two-angle arbitrage
This strategy involves only one digital currency. Immediately after purchasing digital currency, it is sold on different exchanges to earn multiple profits.
3. Triangle arbitrage
Use price differences between the three currencies to arbitrage. For example, the U.S. dollar price of BTC may be different from that of the euro and the Japanese yen. It can be purchased in U.S. dollars, sold in euros, and then converted into U.S. dollars.