First, we need to understand where the opportunities to earn through exchange services come from.
Understanding the principles behind spread formation allows us to identify ways to exploit market inefficiencies (always analyze the reasons).
The main factors contributing to this are:
Different methods used to determine exchange rates
Technical errors in exchange services
High volatility of asset prices, leading to inefficient rate updates
Some exchange services offer bonuses or incentives to attract new users or for transactions with specific cryptocurrencies, creating arbitrage opportunities
News and events
Using different resources to determine rates
How Does Arbitrage Work Through Exchange Services?
As mentioned, there are multiple ways to engage in arbitrage using exchanges and trading platforms. We will cover five main methods:
Spot – Exchange Service
Exchange Service – Spot
Spot – Exchange Service – Spot
Exchange Service – Exchange Service
Spot – Spot
Key Aspects to Consider When Working with Exchange Services
1. Exchange Rate Relevance
Our scanner provides data received from BestChange, but sometimes the rates may not match because BestChange rates are updated with a delay. Before executing a trade, always verify the current exchange rates.
2. Exchange Rate Fixation by the Exchange Service
Arbitrage with exchange services relies on the difference between the exchange rate on a trading platform and that of an exchange service. However, this is only possible if the exchange service has a specific policy regarding rate fixation.
Exchange services may fix rates:
When a transaction request is created
Upon reaching a certain number of network confirmations
By clicking a confirmation button
When the request is created but adjusted if the rate changes by a certain percentage
Only for specific currency pairs
To successfully complete arbitrage at the desired price, we need exchange services that fix rates based on one of the five conditions listed above.
To determine when an exchange service fixes its rate, you can:
Check the page detailing the exchange service’s policy
Review the page where asset exchange takes place
Contact the exchange service’s support team
3. Transfer Network
The transfer speed of different networks depends on their congestion levels, but most networks have an average transaction speed. For a classic arbitrage strategy without hedging, choose networks where transfers take only a few minutes.
4. AML / KYC Policy
Some exchange services may require identity verification before allowing transactions.
5. Exchange Service Reputation
We do not recommend using exchange services that are not listed on BestChange, Kurs Expert, or other verified aggregators. These platforms ensure the reliability of the exchange services they list and assist in dispute resolution.
99% of exchange services you learn about from external sources or individuals are scams, where you risk losing your funds.
6. Liquidity of Coins
If you trade less popular assets, consider their market volume to avoid unfavorable price slippage. Check the order book on trading platforms and the amount of the asset available for exchange in the exchange service.
Managing Your Exchange Service List
From the first day of using our scanner, we recommend creating:
A Favorite Exchange Services list – These will be highlighted when searching.
A Blacklist of Exchange Services – These will be excluded from search results.
By maintaining these lists, you can streamline your arbitrage process and avoid unreliable services.
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