Arbitrage opportunity refers to the chance that an investor gets in buying some cryptocoins on one exchange at a lower price, and simultaneously selling them at another exchange, for a higher rate, making profits in proportion to the investment and the price gap between the two exchanges.
With the advent of online trading in cryptocurrency, the scope of arbitrage opportunities have expanded in leaps and bounds.
Understand the Process
In-order to understand, consider a simple online trading platform like executium.com. Now here (at executium.com) you will find that you are allowed to trade on most of the best exchanges, like Binance, Bitstamp, Kraken, Bitmex etc.
Say for example the rate of BTC now on Binance is 7000 USD and that on Kraken at the very same time is 7200 USD.
You can now buy Bitcoins from Binance, via executium.com, and then sell them immediately on Karken, again via executium.com
You make a profit of 200 USD straight away, if you go for arbitraging a single BTC, minus the transaction costs involved.
However, for successful arbitrage with online crypto trading, your transactions must take place pretty quickly, as price variations happen almost invariably across exchanges within a few seconds.
That is why, executium.com has been exampled in this particular situation as it has a unique selling proposition for high speed and low fees.
Why Online Crypto Trading?
At this stage, you might be wondering why to go for online crypto trading when you have the traditional method of trading via a financial broker? However, check out the following benefits of online crypto trading:
It is quicker.
It offers you multiple cryptos, all in one go, like at executium.com you can buy Bitcoin and sell it for Ehtereum, and executium would take care of the intermediate processing and conversions.
The system is more transparent compared to a physical broker.
There is no chance of an error as everything is automated.
You are not bound by physical geographies.
Most likely, your broker would also trade online via a platform like executium.com, so it's best to save his fee in between.
You will understand the system better.
You have better control over the operations.
Should You Use It?
In a nutshell, if you have a considerable figure to invest in, you must go for it. Arbitrage opportunities are very lucrative for big investors, and even if you are just starting, you can opt for a consultancy package from service providers like the one platform (executium.com) mentioned above. They can assist you to a point where you no longer need to seek advice. Also, if you are making larger transactions, you will have to go through some verification steps as asked by the exchanges, but that is not very cumbersome. On the whole it is a genuine money-multiplying formula, just that it will demand a lot of time and quick decision making from the investor.