Makebit — Arbitrage King
- Halil Enes DAĞHAN
- Jan 9
- 4 min read
Strategy Features
Low risk, high volume.
Risk Information
1. Buying spot positions without arbitrage and hedging, there is a risk of rising and falling (for the gold-standard, just adding a contract exchange is equivalent to automatic hedging)
2. Contract trading, or borrowing currency, in this mode, if there is a sudden rise, there is a risk of triggering a stop loss . The loss is determined by the possible price difference between buying high and buying low wheat (the strategy has already placed restrictions on positions, and the smaller the margin, the stricter the conditions for opening a position).At the same time, if the contract position requires payment of capital fees or interest on borrowing currency, if the rate is too high, arbitrage gains will It may not be able to cover expenses. (The strategy has tried its best to avoid the scenario of paying capital fees. The prerequisite for opening a position is to earn capital fees.)
3. When placing a bilateral order, only one side is executed, resulting in a stop loss after the position is unbalanced, and a unilateral stop loss after the stop loss fails. And the risk of unilateral position ups and downs after stop loss failure.
4. Digital currency exchanges may have various bugs, malfunctions, hackers, or even thefts. Similar black swan events may affect one or several transactions in mild cases, or may cause heavy losses in severe cases.
Strategy advantages
1. It supports concurrent monitoring of spot and contract trading pairs on multiple exchanges to capture arbitrage opportunities.
2. Market neutral strategy, without making price predictions and trend judgments, to obtain stable and reliable returns with almost no risk.
3. Complete position opening risk control the height and delay the abandonment of opening a position, perfectly avoiding risks caused by exchange downtime, freely setting the order quantity and opening slippage, and improving the success rate.
4. Supports custom arbitrage currencies, which can avoid trading pairs with poor liquidity.
5. Positions will be closed automatically if the margin rate is insufficient to avoid losses caused by unilateral forced liquidation.
6. Spot position balance, avoiding the need to manually withdraw currency to balance funds.7. Hedging and closing positions, one-click liquidation, manual permission and prohibition of trading buttons.
About the effect
It has a lot to do with the market.The actual income depends on the following factors, in order of importance:
1. Market conditions. Including selection of exchanges and trading pairs. The greater the trading volume, the higher the turnover, the more active the transactions, and the market makers pulling and smashing the market, the more arbitrage opportunities will appear.
2. Handling fee. In the same market situation, if you run a strategy with a handling fee of 2/10000, you may make 1 yuan a day; if you use a handling fee of 0/10000, you may make 100 yuan a day. Good market conditions are hard to come by. When the market is good, everyone can make money through arbitrage; but when the market is average, the fee is more important. This is more obvious in mainstream currencies. The reason is very simple. When there is a price difference, other people’s handling fees are very low, so you can make money through arbitrage. However, if the transaction is completed based on your high handling fee, the price difference may not even cover the handling fee.
3. Server and network performance. In the same market and with the same handling fees, if your network is better than others, you can get trading signals earlier, place orders earlier, and your income will be better. For example, some professional quantitative traders will host the server in the same computer room (co-location) of the exchange to reduce network latency as much as possible, even if it costs a high cost to reduce the latency to one thousandth of a second.All in all, the biggest factor affecting returns is market conditions. Choosing a currency that fluctuates frequently and has a high turnover rate will have an advantage over a currency that has no fluctuations and a low turnover rate. Under the same market conditions, you must reduce the handling fees as much as possible. Those that can be deducted through point cards and platform coins, as well as those that use invitation codes to enjoy discounts, must use them. These reduced handling fees will be converted into your profits. Otherwise, it will all be contributed to the exchange. The following are the handling fee policies of major exchanges. Other exchanges have similar policies and require detailed study.
4. Account type, such as OKX. If your assets are more than 5Wu, you can switch to the cross-margin account mode. The fund utilization rate will be higher. At the same time, you can automatically borrow coins, and the higher the VIP level, the higher the number of coins you can borrow. If You cannot borrow currency in your account, and you cannot sell spot at the beginning of the period. You must wait until you buy the spot and sell the contract before you can perform spot hedging. In this way, there are fewer arbitrage paths at the beginning of the period. The income will be less at the beginning.