Simple guide to arbitrage between crypto exchanges: LocalBitcoins & Sparkdex

Trading
November 13, 2019

In crypto trading, there are many different ways to earn money and turn a profit over time. Some of these require expertise and an in-depth understanding of indicators and strategies, whereas others are actually very simple tactics anyone can do. Arbitrage between crypto exchanges is one of the easier ways to make a profit from trading crypto, and in this post we’ll explain what it is and how it works in practice between LocalBitcoins and Sparkdex.


What is arbitrage?

Crypto arbitrage is the process of buying the coin at one price on an exchange, and then selling it at another price on a different exchange. Between crypto exchanges, there can be price differences between Bitcoin for example, and arbitrage is simply you spotting the profit in that price difference and making the trades accordingly.

Why are Bitcoin prices slightly different on exchanges? Simply because there are many different markets in the world for BTC and they do not all behave the same way at the same time. This gives you the opportunity to buy low somewhere, and then sell high somewhere else. The benefit here is that you can estimate profits based on calculations, not speculations.

For example, there could be a profitable difference for bid/ask prices for the BTS/BTC markets on Sparkdex and Binance. The opportunity here is to buy BTS on one exchange (at the lower price) and sell BTS on the other exchange (at the higher price) immediately after.

How to find arbitrage opportunities between exchanges

Most arbitrage opportunities can be found when comparing smaller exchanges with larger exchanges, as the difference in activity means the price on the small exchange isn’t changing second by second.

The same arbitrage opportunities can be found between geographic markets. Back in 2017, there was a 30% premium on BTC in Korea compared to the rest of the world. So you could buy BTC in the US at one price, and sell it at a higher price on Korea. 

That kind of opportunity can now also be accessed on the Sparkdex by looking at stablecoins pegged to local currencies, and the difference prices they are trading at for BTC.

Never miss a trading opportunity

Bitspark trading alerts bot
Bitspark Trading Alerts Bot

Follow the BitsparkMarkets Bot in our Telegram channel. The Bot sends out a trade alert whenever there is a sizeable arbitrage opportunity between LocalBitcoins and Sparkdex. All you need to do is join the Sparkdex Telegram channel and keep an eye out for the Bot.

For example, these were some of the recent trade alerts issued by the Bot for the BTC to HKD market:

8 Nov

  • Sell SPARKDEX.HKD for SPARKDEX.BTC
  • Potential Profit: 3358.12 HKD
  • Sparkdex: 67785.54 HKD, LocalBitcoin Ask: 71143.66 HKD

7 Nov

  • Sell SPARKDEX.HKD for SPARKDEX.BTC
  • Potential Profit: 3454.01 HKD
  • Sparkdex: 67785.54 HKD, LocalBitcoin Ask: 71239.55 HKD

4 Nov

  • Sell SPARKDEX.HKD for SPARKDEX.BTC
  • Potential Profit: 3494.44 HKD
  • Sparkdex: 67785.54 HKD, LocalBitcoin Ask: 71279.98 HKD

22 Oct

  • Sell SPARKDEX.BTC for SPARKDEX.HKD
  • Potential Profit: 1060.17 HKD
  • Sparkdex: 67438.46 HKD, LocalBitcoin Bid: 66378.29 HKD

18 Oct

  • Sell SPARKDEX.BTC for SPARKDEX.HKD
  • Potential Profit: 3250.66 HKD
  • Sparkdex: 66771.04 HKD, LocalBitcoin Bid: 63520.38 HKD

Final tally

If you would’ve acted on each of these trade alerts, you could have made 14,617HKD - based on calculation, not speculation.

Join the Telegram channel here.



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