Making profits through Cryptocurrencies is the ultimate purpose of many users. Several methods and options have entered the market to help users make profits. Among them, the Crypto Arbitrage is a highly talked about feature due to its uniqueness and low risk. However, many Crypto enthusiasts still doubt how it works and how to use it effectively.
It’s significant to have a proper strategy before the usage of the Crypto Arbitrage function. Additionally, Crypto Arbitrage can contribute to market efficiency in many countries and is encouraged positively. Hence, this is the right time to learn about Crypto Arbitrage and make high profits through the interesting functionality.
Crypto Arbitrage is the process of buying a Cryptocurrency in a low-cost region and selling it for a better price in another region or market simultaneously to make small profits through price fluctuations. This method is highly suitable for investors who prefer high-frequency trades at low-risk strategies. Before we delve into Crypto Arbitrage more, here’s a small overview of Crypto Arbitrage bot.
What is a Crypto Arbitrage Bot?
Crypto Arbitrage Bots are pre-programmed automated trading software that automatically analyzes the market and picks out the best profits for the users. The profits can be through either the Crypto price changes, exchange trade fee, or any marginal profit for the users. This feature has been utilized in several markets to exploit the price difference from one exchange to another.
For example, if you are a user looking to trade between two exchanges manually, time will be a major issue. Through the Crypto Arbitrage Bot, the algorithm is already set to find profits at any cost. Hence, you can buy the Cryptocurrency at a very low price from an exchange and sell it at a high-prized exchange in just a few seconds. Since Crypto prices are highly volatile, the usage of a Crypto arbitrage bot can save plenty of time.
Why is Crypto Arbitrage Considered a Low-risk Strategy?
Crypto Arbitrage is considered to be a low-risk strategy because the investment is less in comparison to other features. The profit involved here is marginal and hence, at any time the loss can be handled comfortably. Usually, Crypto trading can incur heavy losses which is neglected in Crypto arbitrage. Moving further, it’s essential to know about the different types of Crypto arbitrage trading strategies.
Different Types of Crypto Arbitrage Trading Strategies
Crypto Arbitrage trading can be classified into different types based on user strategies.
Triangular Crypto Arbitrage
Triangular Crypto Arbitrage strategy is used to make profits through three different Cryptocurrencies in a triangular form. This type of profit is possible only when three imperfections exist at a similar time and traders are presented with a rare arbitrage opportunity.
Cross Exchange Arbitrage
Cross-exchange arbitrage is the common strategy many traders use as they purchase Cryptocurrency from one exchange for a low price. The newly bought Cryptocurrency is then sold on a different exchange where profit seems inevitable.
Time Arbitrage
Time arbitrage involves tracking the price of Cryptocurrencies constantly for a short period and taking advantage of the small variations. This strategy is quite helpful for traders who want to make instant profits in a time frame.
Inter-Exchange Arbitrage
Inter-exchange arbitrage works for traders who wish to utilize the price variations of token pairs in Crypto exchanges. This strategy is usually abundant in the stock market and is now been used in the Crypto industry as well.
Best 5 Crypto Arbitrage Bots
Presently, there are many Crypto Arbitrage Bots in the industry with exclusive applications. Among them, a few names have stood out with the features they provide for the traders. Here are the best 5 Crypto Arbitrage Bots in the industry at the moment.
- Botsfolio
- PixelPlex
- Gimmer
- Quadency
- Cryptohopper
Moving on, it’s essential to know how Crypto Arbitrage Bots work before coming to a conclusion on it.
How Does Crypto Arbitrage Bots Work?
Crypto Arbitrage Bot consists of three main components which play the most important part in the functioning of the automated program. Here’s a small explanation of how a Crypto Arbitrage trading Bot works.
Signal Generator
This component helps the Trading Bot to analyze and generate signals based on the market data. Technical Indicators remain the key here as they help to study how the Crypto market fluctuates and enhance the Bot to decide to buy or sell Cryptocurrency.
Risk Allowance
The Trading Bot based on the data from the Signal Generator sets how much risk through Cryptocurrencies can be taken. Although some restrictions are placed upon setting this risk allowance, the Trading Bot makes the decision here.
Processing
In this phase, the Arbitrage Bot converts the received signals into requests through API keys for the exchanges to understand.
Having seen the inbuilt working process of Arbitrage trading Bots, it’s crucial to know how to use the Crypto Arbitrage Trading Bot profitability.
Advantages of Building Crypto Arbitrage Bot
Crypto Arbitrage Bot has many advantages for the users. Crypto traders are pretty much focused on making through Trading Bot since the manual amount of energy spent on trading can be cut down comfortably. Here are the advantages of Crypto Arbitrage Bot.
Error Reduction
Due to the involvement of Bots and automated process, the manual errors caused during trading is neglected. Traders can get emotional since profit and money have a big role to play here.
Quick Trading
Crypto Arbitrage Bot opens up an opportunity for traders to make profits instantly by exploiting the different exchange prices. This may not be possible with manual trading since the prices keep changing from time to time.
Risk-Free
Crypto Arbitrage Bot can carry out more than one process at a time including market analysis and bringing up the best options for traders. Along with the market analysis, the data points are also collected and mapped to predict the discrepancies early.
With all these advantages of a Crypto Arbitrage Trading Bot, many entrepreneurs are looking towards building one on their own. However, the main question among them is how to build one in an effective manner.
How to Build a Crypto Arbitrage Trading Bot?
Entrepreneurs looking to set up a new Crypto Arbitrage Trading Bot needs to undergo a set of process. The technical part of the development process includes picking the coding part, strategy, architecture design, encoding the bot, smart contract audits, and much more. As a startup, there are two ways for you to build one. Either you can approach a freelancer or a Development company with experts in the field.
Approaching a freelancer could be ideal if the startup’s focus is on building a Trading Bot at a cost-friendly price. However, it could be a risky process since quality is unlikely to be assured through a freelancer. Proper guidance and experience to solve complex problems would be a major question in that case.
Instead, startups can opt for a Development company with experts in the blockchain field. This is an ideal way since the entire development process is carried out in a systematic way with regular checks. Hence, the process becomes more transparent to the entrepreneurs and any issues can be handled by the company easily.
Cost to Develop a Crypto Arbitrage Bot
To develop a Crypto Arbitrage Bot, the average cost would be around $50,000 to $70,000. However, this could change based on the client’s requirements. For more features and functions included in the Trading Bot, the price could rise parallelly. The development company you choose also matters for the Crypto Arbitrage Bot cost. While some companies charge higher prices, quality is the factor that needs to be taken into account ultimately.
Why Choose Coinsclone for Crypto Arbitrage Bot Development?
Coinsclone, a leading Cryptocurrency Exchange Development Company with extensive success is well-versed in Blockchain projects. Our experts provide solutions for the toughest projects with an excellent pipeline. We have worked with more than 200 projects in the Crypto sector and specialized in other services like NFT Marketplace development, Crypto Wallet development, Crypto Payment Gateway development, etc.
We have analyzed the importance of Crypto Arbitrage Trading Bots and see it as the future of the Bitcoin industry. With the profits that can be made out of it, it is certainly an interesting innovation. Hence, make early inroads in the blockchain space by developing a Crypto Arbitrage Bot soon.