In cryptocurrency arbitrage, one key concept to grasp is the spread.
The spread is simply the difference in coins between the start and finish of an arbitrage trade. In other words, it's how much you can gain in a single trade.
In today's market, the typical spread in arbitrage ranges from 0.05% to 1.5% per trade. But when the market gets volatile, spreads can spike as high as 30% per trade.
However, seasoned arbitrage traders approach profitable trades with caution and avoid risky high spreads.
Before diving into what looks like a sweet deal, MAKE SURE you double-check all the details - namely:
Check the exchanger’s reviews and ratings on BestChange.
Check if you can deposit and withdraw the asset. Keep in mind that it might not be available on every exchange.
Check the current price of the asset on exchanges and currency exchange platforms.
Check if the exchanger has fixed rates. If not, make sure the rate is profitable for you. And don't forget to factor in the transfer fee!
Check if you need to include a memo or comment when transferring funds through the exchanger and exchange. While it's usually not required, there are cases where it's mandatory.
Make sure the exchange offers the trading pair you need and that it's not blocked.
Also, if technical issues arise and the spread becomes too large, exchangers may cancel transactions and return assets to avoid losses.
Technically, the exchanger can't seize your funds. But in reality, there are some exceptions and grey areas.
For instance, there was one case that didn't work out well. A user managed to grow their initial deposit of $1,500 to $2,683 in just one evening - a nearly 1.5 times increase. But then, the exchanger unexpectedly froze their funds during the exchange. The user had successfully accumulated profits of $1,183 through multiple rounds, but in the final round, the exchanger withheld the earnings and only returned the initial deposit.
What's the next step if this happens? How can you recover your earnings?
If the exchanger freezes your earnings, you'll need to reach out to BestChange support and file a dispute. But it's best to avoid escalating things that far if possible.
While profit freezing is a rare occurrence, we want to help you avoid it altogether. To minimize the risk, we recommend you do the following:
Keep your exchanges limited to a fixed amount, and avoid using your profits for subsequent trades. If you started with a base amount of $1,000, stick to that amount and don't let your earnings tempt you to increase your trades.
Consider using multiple exchanges for your transactions.
Use a VPN and create multiple accounts on the currency exchange platform.
Don’t get greedy.
Avoid overtrading by capping your repeated transactions at 3-4.
*If, during a trade, you are prompted to complete a CAPTCHA (an automated public test to determine whether you are a bot or a human), then it is better to stop further executing the trade.
So, be cautious when you come across an offer that seems too good to be true. By following the guidelines outlined above, you'll significantly boost your chances of growing your capital and avoiding potential pitfalls!
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