What is Arbitrage
The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. Arbitrage exists as a result of market inefficiencies; it provides a mechanism to ensure prices do not deviate substantially from fair value for long periods of time.
How you can earn more coins using arbitrage?
If you are a day trader for crypto currency, You must have figured out that different exchanges has different prices of same coin due to some technical-nontechnical reasons. This creates the opportunity for arbitrage.
Key to successful arbitrage.
1.) Understand the fee structure. Be thorough clear on how much you are paying in fees to your exchange for any trade.
2.)Wait for the right moment. Keep tracking the coin price for different exchanges. If the difference in the price compensates the trade on both side along with the transaction fees, then you have chance of some profit.
Can you automate it.?
Yes why not. Most of the exchanges provide apis, You can easily write the software (If you know programming. Language doesn't matter), which keeps tracking different exchanges for the arbitrage opportunities.
Speed is the key.
You don't gain, if you don't act fast. Thats why you need software to make those decisions and act on behalf of you.
Have i tried it.
Yes, I have tried manual process by buying litecoin on bittrex and moving it to gdax, which had high price compared to bittrex. and then converted litecoin to bitcoin and moved bitcoin back to bittrex. I did this with one litecoin and earned 40$ profit for this simple game.
