Photo Credit To Mohammad Saad Via Flickr
If you have been in the crypto industry for a while, you must have noticed that the prices of crypto vary at different exchanges. The main cause of this is that each exchange has its order book and the buys and sells must be reconciled by each exchange. This leads to the prices of certain crypto coins being different depending on the exchange you visit. If you are smart, you can take advantage of the price differences to make some profits.
How to Benefit for the Price Differences
It can be quite profitable to take advantage of the varying prices of cryptocoins. This is known as arbitrage and many people in the crypto world are already benefiting from it. Even a small price difference of a few cents can make you a lot of money if you know how to utilize it. The most common assets with price fluctuations are coins at the bottom of the table. It might be almost impossible to benefit from major coins like BTC and ETH using their price differences.
To find these deals, you can use various tools online. One good place to start is at crypto aggregation sites. The sites usually list the price of cryptocoins at various exchanges. With this information, you can buy a crpyotcoin at a lower price and sell at an exchange where it has a higher price.
In most cases, you will only make a few cents per coin. However, if you do this long enough, you will start to make some profits over time. However, you also have to be aware that many other people are doing this.
It means that the window to flip coins for a profit usually lasts only a few minutes. However, if you plan to hodl the coins, you might make more money. You also have to be aware of the fund transfer windows since some exchanges are notoriously slow. For instance, by the time your funds are confirmed, someone else might already have taken them. You also need to be aware of the charges. At some exchanges, the commissions charged will eat away at the small amount you make flipping coins.
In general, you need speed on your side. It is recommended that you already have funds in various exchanges. This will ensure you never miss a chance to make some money. Besides that, ensure that you have a stable internet connection to reduce the lag time it takes to confirm your action on an exchange.
It is a Lot of Work
It is your choice whether to take advantage of these price differences or not. If you are a bargain hunter, this is a great way to make money even during a bear run. However, you need to know that it requires a lot of information hunting. You will always have to be in front of your screen looking at the changing prices. It is not for everyone except those who enjoy mining for information on the crypto market.