Crypto Arbitrage becomes more popular because of a lot of new decentralised crypto exchanges. Crypto traders tests old, already proven in the forex market, trading algorithms and develops new, suitable only for crypto arbitrage, trading strategies.
In this article we would like to explain several arbitrage strategies and how to release these strategies with our VIP Crypto Arbitrage Software.

Any arbitrage trading can be divided into two categories:

• Dimensional arbitrage trading - when trading operations are conducted at different trading floors / crypto exchanges, but at the same time;
• Provisional arbitrage trading - operations are carried out on the same trading platform / crypto exchange, but at different times.

Hedge Crypto Arbitrage

Dimensional arbitrage trading is most popular method for crypto arbitrage. The price for the same instrument (cryptocurrency) can be different for different crypto exchanges and arbitrage  software compares prices between the two exchanges/brokers and after the arbitrage difference detected (open difference) software opens 2 opposite orders, buy and sell (buy on the exchange/broker with lower price, sell on the exchange/broker with the higher price), at the same time.

Once the opposite price difference (close difference) detected (price on the broker/exchange with the sell order is now lower that on the exchange/broker with the buy order) software closes both orders etc. VIP Multileg Crypto Arbitrage Software is already integrated with: GDAX, Kraken, Bitfinex, Bitstamp, Bitmex, Binance, Poloniex, Bittrex, Deribit, Okex, Cexio, Huobi, Hitbtc, EXMO, SFOX crypto exchanges.

For example
Price on SFOX on ETH = 290 USD
Price on Binance on ETH = 310 USD
Step 1

VIP Multi-Leg Crypto – Arbitrage software will sell ETH for USD on Binance and buy USD for ETH on SFOX
Waiting…..
Price on SFOX on ETH = 325 USD
Price on Binance on ETH = 310 USD

Step 2
VIP Multi-Leg Crypto – Arbitrage software will buy ETH for USD on Binance and sell USD for ETH on SFOX
If our lot size = 1 we will receive profit:
(310-290) +(325-310) = 35 usd

Ideally, everything looks great, but in practice the profit will be much less, since any cryptocurrency exchange charges a certain commission from the operations of the trader. Our Crypto Arbitrage Software allows you to set commissions for each exchange and in this case,  software will take them into account.

Commission 1(%) – commission per trade charged by broker/exchange on side 1 to be included in arb deal result calculation. Commission 2(%) – commission per trade charged by broker/exchange on side 2 to be included in arb deal result calculation. Commissions can be set in points or percents, depending on selected profit mode.
Points – difference will be calculated in points Currency – difference will be calculated in currency Percents – difference will be calculated in percents

When we created this software 2 years ago, highest volatility observed for bitcoin and bitcoin arbitrage could be called with confidence as most popular bitcoin trading strategies. If compare bitcoin arbitrage with any other bitcoin robot (bitcoin bot), then of course biсoin arbitrage was the most profitable and less risky. Today we would recommend to arbitrage ETH, XRP, and altcoins.

Latency Crypto Arbitrage

This method based on idea that one crypto exchange is always faster them another one. For example we know that price on SFOX updates faster then on Binance. In this case we can check “Virtual” box for side with SFOX exchange.
Virtual – open virtual order instead of real one on the selected side. Allows to use the software in 1-leg mode. [Important!!! Open and close methods should be set as open both/close both for this option to work properly.]

For example

Price on SFOX on ETH = 290 USD
Price on Binance on ETH = 310 USD

Step 1
VIP Multi-Leg Crypto – Arbitrage software will sell ETH for USD on Binance only
Waiting…..
Price on SFOX on ETH = 290 USD
Price on Binance on ETH = 290 USD

Step 2
VIP Multi-Leg Crypto – Arbitrage software will buy ETH for USD on Binance  only
If our lot size = 1 we will receive profit:
(310-290)  = 20 usd

If your license is activated not only Crypto trading, but  for FX trading as well, you can compare prices for crypro currencies between FX brokers who provide feed for crypto currencies as well with crypto exchanges. For example you can trade Crypto CFDs: BTCUSD, ETHUSD, LTCUSD, XRPUSD, BTHUSD with LMAX via FIX API. Live prices

Sometimes opportunities for arbitrage arise within the trading platform / crypto exchange itself. For example, with the difference of quotes of several cryptocurrencies. This arbitration scheme is called a triangular crypto arbitrage.

We have created triangular crypto arbitrage bot for our shareware Crypto platform 1stCryptoTrader. Please learn more: https://ico.1ct.io