Deposits and balances
If your exchange has no margin trading option, to trade BTCUSD on exchange you need to have balance in BTC and in USD, to trade ETHUSD: you need to have balance in ETH and USD, etc.
You can deposit on any currency (some exchanges allow to deposit only in crypto currencies, but some exchanges allow to deposit in your local currency like USD or EUR), and the exchange inside platform. For example, you wold like to trade LTCUSD and you made deposit to exchange in BTC. In this case you need to buy USD for BTC and LTC for BTC.
How to calculate what minimum deposit do you need.
For example, you would like to trade BTCUSD. Minimal lot size allowed by exchanges 0.01 and if bitcoin price now = $19,000 to buy 0.01 btc you need to have $190 on USD wallet and 0.01 BTC on BTC wallet on each exchange. But we recommend to have little bit higher balances.
“Difference to open” and “Difference to close”
We have created Crypto Currencies arbitrage calculator. You can use this calculator if you’re using our crypto multileg arbitrage or if you’re using an arbitrage strategy of your own. And you’ll need it in order to calculate the difference to open and the difference to close, and in order to cover the commissions charged by the exchanges and to make money. As crypto currencies are highly volatile – they can move up and down sharply – you’ll need the calculator to make recalculations as frequently as needed in order to keep up with the volatility. For example, if your Bitcoin goes up from 15,000 to 17,000, it is advisable to recalculate your difference to open and difference to close to make sure that your arbitrage orders will cover all the commission fees.
So how does it work?
Let’s select the first pair exchange – we’ll go with Bitstamp and “bitcoinusd” as the currency. The second pair exchange will be bitfinex and the currency will also be bitcoinusd. The application automatically sends a request for prices, which it then displays. You can see the bid and the ask for both exchanges. The bitstamp prices are at the top, and the bitfinex prices are at the bottom. Next you have to set your difference to open. Let’s say, 10,000. You can drag it to get an approximate number and then use the plus/minus buttons to get the exact number that you want. We’ll just leave it at this. You do the same thing for the other pair – we’ll set it to approximately 10,000. And then you have to specify the lot size you want. For example, if you want to use 001, which is the minimum lot size on the exchange, you choose that; or you can set the lot size to 002 – that’s entirely up to you. We’ll go with 002. You then set the commission rate for each exchange.
Commission rates vary – the typical rate is 0.2; it can also be 0.25 or 0.3, or perhaps a different rate, since commission rates depend on the volume traded – with more volume, the commission rate falls – so you need to set the commission rate that you’ll be charged by the exchange. You then click on “Calculate”, and the application calculates your commission fees, you first and second profits, and the total net profit once the commission fees are deducted. So, with a lot size of .02, this is the profit that you will receive from your arbitrage trade.
You can then calculate your daily profit by multiplying the number of arbitrage situations by the profit from one arbitrage trade. Another thing that we recommend is setting your difference to open so that the value is several times greater than your difference to close; that way, the application will generate more arbitrage trades. For example, we can set the difference to open to, say, 17,000, and the difference to close to approximately 5,000. We recalculate. We get a smaller profit amount, so we can increase the difference to close a little bit. So now we get roughly the same profit amount, but the number of arbitrage trades will be higher.
Max spread – we use this options (filter) to prevent order during high spread. You can check average spread on your exchange and set this parameter little bit higher.