Initially, earnings on cryptocurrency existed exclusively in the form of mining, but with the development of the industry, this method became less and less profitable. Now there are other ways to make a profit from this market, and the main one is trading. However, the most enterprising people who want to make money on a popular instrument have found an opportunity to speed up the process of making a profit - cryptocurrency cross-exchange arbitrage . What is this method, and is it really profitable, we will analyze in this article.
What is cross-exchange cryptocurrency arbitrage
Cryptocurrency arbitrage is essentially a speculation tool, that is, buying an asset at a lower price and reselling it at a more expensive one. There are two options for arbitration - intra-exchange and inter-exchange. The first option involves working with a single site, and earnings are based on the purchase of an asset for the purpose of resale in the future, at a more favorable price. Cross-exchange arbitrage is buying an asset on one exchange where the price is at a lower level and selling it on another where the price is at a higher level. This method works well with large volumes of trading operations, but it has a number of disadvantages and risks. Firstly, the value of an asset can change significantly, and if you do not get into the "timing", the resale may lose its profitability, secondly, some resources block users engaged in such activities, and thirdly, some exchanges may delay the payment of funds, which will result in loss of profit.
How to use low-risk cross-exchange arbitrage
For a stable income, you should know a few basic rules of arbitration. Every speculator should understand that not all exchanges are reliable, and often small exchanges with a favorable price delay payments for a period of 2 to 24 hours. Failure to receive funds on time can lead to loss of benefits, which means that you should only use proven sites. Secondly, you should take into account the commission, because if the earnings from the operation are less than 3-5%, then the profit may be reduced, or even completely eliminated by the intermediary. And the last - do not limit yourself to just one tool, use various sources of income to diversify risks, for example, cryptocurrency traders should invest not only in coins, but also, for example, in RusHydro shares , this approach will reduce the riskiness of investments.