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Arbitrage 102: Trading Without Moving
- Arbitrage algorithm aims to profit from price differences between crypto exchanges without moving assets around.
- The algorithm operates by identifying price inefficiencies and executing trades in closed loops using assets like USDC, USDT, BTC, ETH, and SOL.
- Traders sell assets where they are priced higher and buy where they are cheaper to capitalize on the spread.
- Challenges include time, fees, liquidity checks, execution and withdrawal fees, and network speed.
- A cautionary tale involves a bot buying a token with zero liquidity, resulting in useless coins.
- Single exchange arbitrage involves executing trades within an exchange without moving funds between exchanges.
- Traders must quickly navigate through trading pairs to identify profitable chains and use WebSocket for real-time pricing data.
- Synced asset stacks across exchanges allow for identifying closed loops for profitable trading opportunities.
- Executing trades within exchange loops can lead to profit if the total USDC increases without any asset decreases.
- Arbitrage requires keen observation skills and fast reaction times to capitalize on opportunities.
- The author invites readers to share thoughts, ideas, or stories about arbitrage experiments and connect via Twitter and LinkedIn.
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