Trade the Spread: Arbitraj.io
The newly-launched Arbitraj.io simplifies cryptocurrency arbitrage trading. The Arbitraj homepage alerts you of price discrepancies you can, armed with accounts at a range of cryptocurrency exchanges, take advantage of.
In this screenshot, you can see a clear opportunity for a 42.81% trade: you can buy EOS on Binance for $4.32, transfer it to your Bit-Z account, and sell it for $6.16.
Arbitraj.io scans more than two dozen exchanges for opportunities like these —it’s an excellent resource for quick trade ideas as long as you’re open to opening (and keeping track of) a few dozen exchange accounts.
Trade the Pairs
In cryptocurrency, “trading pairs” describes a trade of one cryptocurrency for another. This is a departure from the way most think about cryptocurrency pricing — “Bitcoin was $5,000 today” only takes the BTC/USD pair into account.
That’s a fine way to operate in your day to day, but consider this hypothetical: you buy 1 BTC (worth $5,000), hold $5,000 USD, and want to acquire 10 ETH (at a rate of $500/ETH).
The next day, BTC increases in value by 10% — it’s now worth $5,500/BTC — while ETH stays the same ($500/ETH). You can now afford 11 ETH for the same 1 BTC you had on day one while you could still only afford 10 ETH with your USD.
The real profitable trade strategies are more complex — I recommend looking for some Forex trading books or resources— but anytime that one major cryptocurrency moves differently than another, there is an opportunity.
If you’re a loyal hodl-er of major crypto on an exchange like Poloniex, you can make your stake available for a loan and earn interest.
I’ve seen rates vary wildly so your milage may vary, but these are considered low-risk loans since Poloniex ensures a leveraged margin trader liquidates at a level where they repay the loan. (I’ve only done this on Poloniex and can’t speak for any other exchange experience.)
Consider a Short
If you’re watching your BTC lose value or tread water while CoinX skyrockets, you may want to consider opening a short position, a bet the price of an asset (in this case CoinX) will decrease.
You’re effectively selling CoinX at $1.00 and then hoping to buy CoinX at $0.75 in the future so you can keep your $0.25/CoinX profit. Many of the major exchanges allow for such a trade.
An important note: it’s easy to think in terms of USD here but it’s critical to understand trading pairs before opening a short. If you open a short on a BTC/CoinX pair, it won’t really matter where CoinX goes in terms of USD value — it will only matter that BTC does well vs. CoinX.