Lately I have been focusing on different means to earn money, and someone talked about arbitrage trading and how you could make a lot of money from it. I won’t lie, it’s possible, I have been lucky some few times and I have been unlucky some few times. But either way, I learnt my lessons, so I am putting it out there for anyone so they learn from me.
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One thing I have come to realize is that, in arbitrage trading, lots of maths needs to be done so as not to make mistakes, if you get your calculations wrong, you will end up losing more than you are making. So you have to always do the maths, to know if it’s worth trading. If you are arbitrage trading on a DEX market for instance, where you have to select a price order to buy or sell, some times the tokens are usually paired with the DEX market place native token, so you have to be careful to use the best exchange with the best price.
This way you can get maximum great profit, after doing that, you also need to look out for the transaction fees, what rate are the transaction fees so you don’t go paying more than you are making. Most times the profit made from arbitrage trading is usually small, but the good news is that, you can make the transaction as many times as possible, as long as you are accumulating those 0.75% - 1% interest after trading. You are practically just buying from one source and selling to another at a higher price.
Some platforms charge 2% transaction fee, some charge 1%, some charge lesser while some don’t charge in % but have a fixed charge fee regardless of how much you are transferring, this is something you have to consider before making those trades, so you don’t end up making 0.6% profit and spending 1% in transaction fees. If you are making 3% and you are spending 1% in transaction fees, that will bring you to 2% net profit. That is okay, if you repeat this process for as long as you can, then you are good to go.
A recap, don’t forget to do your maths before trading, don’t forget to compare transaction fees and don’t forget to be patient and careful while doing it, because it might get overwhelming sometimes, so you don’t end up making mistakes somewhere.
