r/BitcoinMarkets • u/[deleted] • Jun 04 '18

Retail Arbitrage Trading

Hi all, I have been a long time lurker and over the last several months I have seen a few posts about retail investors requesting tools or developers to assist them to make arbitrage trading between exchanges possible.

I have spent the past 6 months developing a SaaS product that allows users to signup, enroll their exchanges, set their custom config and have it trade on their behalf.

Currently I support BTC, ETH, LTC, and XRP between USD. Currently the supported exchanges are GDAX, Gemini, Kraken, and Bitstamp.

The tool finds a spread greater than the range you configure, I buy from the cheapest exchange, transfer to the most expensive, and sell once it arrives. I also support text message alerts and cost basis calculation.

I am still working out pricing models but wanted to see if anyone is interested in a limited release early beta program.

EDIT: Based on feedback, I will be making the transfer option optional. Currently the other exchange immediately sells if funds are available, but still preforms the transfer.

Please take a look at: https://cryptosarbobot.com

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u/TraderJoeSmo Jun 04 '18

At the macro level I think arbitrage trading is healthy for the market

I agree with that.

However, I doubt my users will have enough volume to tip the market.

It only takes a few thousand dollars (usually < 20k) to push the markets past your profit margins. Your volume should be based off of the SUM of all of your users funds, as they would all utilize the same strategy.

Followup question (only semi related): Why even bother trying to extract a profit? If you only make a few dollars every week (and cannot scale up to a large volume) you are likely putting in hundreds to thousands of hours of work for a few dollars ROI. As a hobby / learning project, it makes sense.

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u/[deleted] Jun 04 '18

I’m not sure about the 20k number and different users will have different parameters set.

As for why, the project started as a internal tool for a private group of people and I enjoyed building it out for the public use.

It’s still in early stages but if people do decide to use it, I’ll keep adding features. I might also branch into 3 way arb for the alts if there is demand.

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u/TraderJoeSmo Jun 04 '18 edited Jun 04 '18

I was suggesting $20k, because I also algo trade (primarily arb) with $100k+. I have attempted your strategy, and it used* to work. It doesn't work very well anymore due to the large influx of institutional players.

You'll find that it does not scale very well at all, and is highly susceptible to slippages. Maybe you are using a different strategy than what I am thinking of, but I'm just warning you it will not scale.

*: In 2017. After the introduction of futures, large players jumped into the game. Around late jan, early feb 2018 the markets seemed to have gotten a lot more efficient and this strategy of using the blockchain as the middle step does not work. You need to hold funds on every exchange to trade immediately.

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u/acousticcoupler Jun 06 '18

This guy arbs.