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As a cryptor, surely your mind is constantly looking for ways to stay on top of the "game" and get an edge in your quest to get bigger and bigger profits. As a crypto trader, there are various interesting and more or less risky trading methods that you can employ, especially since the scramblers are out of government controls, there are many price differences in various trades.
One of these methods is called arbitration trading in cryptocurrency and is generally considered a very simple and low risk strategy. In this article we will cover various aspects of this interesting method of negotiation such as cryptographic arbitrage trading, how it works, what are some of the most typical strategy bases and what are the associated risks.
What is cryptographic arbitrage trading?
According to Wikipedia, in the typical economic and financial sectors, arbitrage is "the practice of taking advantage of a price difference between two or more markets: hitting a combination of matching agreements that capitalize on the imbalance, profit being the difference between market prices".
To put it as simply as possible, arbitrage implies that you are buying a particular currency from a stock exchange A when it is cheaper than the one on exchange B, and then sell it on B, and benefit from the remaining difference. When it comes to cryptographic arbitrage trading, it can be argued that it works as an arbitrage of shares. However, there are some discrepancies you should be aware of before engaging in this trading method.
Because the cryptography market is incredibly volatile, sudden changes can cause price disparities between stock exchanges. Another aspect worth considering is the fact that since most cryptographic exchanges are not regulated, price disparities are only amplified. These price disparities in the cryptocurrency exchange prices for a particular currency can be triggered by a multitude of reasons, such as low levels of liquidity. Finally, contrary to typical arbitrage, arbitration trading in cryptocurrency is much more dependent on technology and software.
How to make the most of cryptographic arbitrage trading?
There are two ways to proceed with cryptographic arbitrage trading: you can opt for the manual version or you can use the services of a specialized cryptocurrency arbitrage software or cryptographic arbitrage bot.
The first version involves a trade having to manually monitor the price of an asset through a wide range of exchanges. Although some exchanges offer their users various price monitoring tools, it is easy to understand why this method is not exactly practical. This method requires that you always be ready to proceed with arbitration once a disparity is revealed. One of the most important aspects to keep in mind is the fact that speed is of the utmost importance for an effective arbitrage procedure.
This is just one of the reasons for opting for arbitrage trading with the help of a bot. Arbitration bots are also more reliable than you can ever be, as they are not influenced by the same physiological needs as human traders. There are some robots that can track the price of multiple exchanges, but most come with support for just one. However, in addition to choosing a bot, it is also important to remember that it must be configured correctly to function as intended. There is also some maintenance work. For example, you will be asked to manually rebalance your wallet.
And the risks?
Without a doubt, the arbitrary exchange of cryptocurrencies limits downside risks, and can be a successful trading method if you have the experience, patience and inspiration for it. However, there are some inherited risks.
One of the main problems to keep in mind is the risk of price reduction. If, for example, the current state of the market is "bearish", it may not be worthwhile to enter into arbitrage as your trading funds will decline in value over time. In short, the profits generated in this situation may not be sufficient to make a profit (or even cover losses). This can be somehow neutralized by using a trading method called margin trading, which is not exactly risk free. In reverse.
Then there are many risks related to the volatility of the encrypted market which implies a lot of price movement. During a bull market, when exchanges are low, it is advisable to sell only on a stock exchange while buying only on the other stock exchange. The worst case scenario is that while moving their funds through the blockchain and becoming unavailable, initial prices may have already changed drastically. To reduce the risk of movement as much as possible, you should only use reliable exchanges with excellent 24/7 support.
There is also a risk of execution associated with the cryptographic arbitrage trade. This risk comes from the possibility of not being able to satisfy the trade from one exchange to another because someone else was faster than you. This is usually a risk associated with manual trading. 
Conclusion
Before concluding, it is important to note that the amount of arbitrage you can perform heavily depends on the market situation, even with robots. Arbitrage trading on Crypto is without a method to try for anyone trying to enter cryptographic trading. We hope this article has helped you shed light on the basics of cryptographic arbitrage trading and, as with all trading techniques, start small, and if you're good at it, go from there.
