What Is "Arbitrage Trading"?
Arbitrage is a low-risk investment strategy that involves buying and selling assets simultaneously to capitalize on price discrepancies. In crypto, this is often called "arbitrage trading" — purchasing an asset (e.g., USDT) on one exchange where prices are lower and selling it on another where prices are higher to pocket the difference.
Historically, price gaps between exchanges were significant, making arbitrage highly profitable. However, scams like "auto-arbitrage bots" tarnished its reputation. Despite this, arbitrage remains a legitimate method, famously used by FTX’s SBF early in his career.
Key Features:
- Minimal risk: Trades are executed only when price gaps are confirmed.
- Predictable returns: Profits are locked in before execution.
- Flexibility: Funds can be withdrawn within hours.
Step-by-Step Arbitrage Trading Guide
1. Register & Verify Accounts
- Sign up on BITGIN Exchange (or similar platforms).
- Complete KYC using the same bank account across exchanges.
2. Compare USDT/TWD Prices
- Identify exchanges with the largest price gaps (e.g., 0.3–0.7%).
3. Execute Trades
- Deposit TWD into BITGIN, buy USDT at the lower price.
- Transfer USDT to another exchange (e.g., MAX) via TRC20.
- Sell USDT at the higher price, withdraw TWD to your bank.
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Risks & Mitigations
| Risk | Solution |
|------|----------|
| Market volatility | Monitor real-time price gaps. |
| Bank scrutiny | Document transactions for compliance. |
| Trading fees | Use platform tokens for fee discounts. |
Performance Snapshot
- $30,000 capital** → **$2,000/month profit (real-world tested).
- Annualized ROI: Up to 80% during peak gaps.
FAQ
Q: Is arbitrage trading legal?
A: Yes, but ensure exchanges comply with local regulations.
Q: How often do price gaps occur?
A: Gaps appear sporadically — track markets daily.
Q: Can I automate arbitrage?
A: Manual trading reduces scam risks; avoid unverified bots.
Final Tips
- Allocate <10% of your portfolio to arbitrage for balance.
- Diversify with grid trading or staking for steady growth.