From buying cryptocurrencies and waiting for them to be worth more to sell them, mining them, and thus obtaining a digital token as a reward obtained from the Blockchain itself. Here we will talk about one of the most popular ways to earn money available, cryptocurrency arbitrage. That is why we have created a list with the steps you should consider so that you can make cryptocurrency arbitrage much easier.
What is cryptocurrency arbitrage, and why it is different from the regular methods of exchanging cryptos?
Cryptocurrency arbitrage, also called curling, is a form of trading that seeks to take advantage of the price difference between platforms. In other words, you buy a cryptocurrency cheaply on an exchange to resell it more expensively on another platform and thus make money with that price difference.
Even if this is not to dissimilar from traditional methods of handling and earning from cryptos, the main difference is that the arbitrage is never intended to be a strategy in which holding of the crypto coin is considered.
Arbitrage is meant to be done fast, buying and selling in the shortest time possible.
How to correctly make cryptocurrency arbitrage
Monitoring different exchanges: The first thing you must do for arbitrage to work is to monitor the platforms. This is because the secret to profits lies in finding cryptocurrencies with low prices that you can sell at a higher price.
Activate alerts: Another of the best tips we can give you is to activate alerts on price changes. This way you will know when a coin has gone down or up in value in the different brokers. This way you can make better profits or know when to buy or sell.
Open accounts on exchanges or brokers: Of course, to carry out a cryptocurrency arbitrage you need to open an account on the exchanges so that you can trade on it. If you find platforms where the price is attractive, then you should open an account there.
Calculate the potential profit: Once you have found two cryptocurrencies with attractive prices then the next step is to calculate the potential profit. For example, take the buying price of Bitcoin on platform A and subtract it from the selling price on platform B. This way you will know how much you will earn!
Fund your account and buy cryptocurrencies: If the business seems attractive, the next step is to fund the account where you will buy the cryptocurrencies. Funding means you must deposit the corresponding money, either the minimum or the amount you will invest. Once this is done, it is time to buy cryptocurrencies.
Transfer them to another platform: Ready, if you have made the purchase of cryptocurrencies on platform A, where they are cheap, the next step is to transfer them to platform B where you will sell them. To do this, make use of the Wallet transfer mechanisms.
Sell them and withdraw the proceeds: The last step is to sell the cryptocurrencies you just transferred.
All the above steps look easy if you consider them singularly, but all together they are a lot of work!
The best way to do arbitrage is to rely on a good arbitrage software or online platform: those platforms take off the burden of checking continuously for different prices on dozens of online exchange, and allow you to buy and sell faster.