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You need volume for liquidity which you need to execute the arb. So, for instance, cryptoA trades for $99 on exchange 1, but $101 on exchange 2. Quick, buy on
by startupdiscuss 8y ago
You need volume for liquidity which you need to execute the arb.
So, for instance, cryptoA trades for $99 on exchange 1, but $101 on exchange 2. Quick, buy on exchange 1 and sell on exchange 2!
Congrats you made $2 on each trade x 5 cryptos. That is hardly enough volume to make it happen.
Now imagine that the volume is so thin that after you bought the first one on exchange 1, the price gap closed, and by the time you sold on exchange 2 it collapsed.
- koolba 8y agoDon't forget to throw in significant counter party risk in dealing with fly by night exchanges. There's a non-zero chance that your entire balance held at an exchange disappears overnight.