Think of it as a complete & rewarding roadmap across validated cryptocurrency exchanges. The algorithm is made for discovering multi and intra-exchange arbitrage opportunities that are tough on the naked eye.
AE Path algorithm is different from most others in a way that goes far beyond traditionally accepted quotes based on the “last-price” strategy. The algorithm is designed to analyze & record book data in an attempt to measure liquidity for the purpose of considering the trade size as part of the arbitrage equation.
The end product is laser-accurate results that never fail. All too often, however, because of a lack of crucial volume/liquidity data, many starting arbitrage traders mistakenly trick themselves into unpleasant circumstances, where significant losses become an inevitable component.
Trading volume is an essential piece of information found in every high-frequency commodity trading algorithm. When the trading formula is lacking a liquidity component, the outlook becomes inaccurate.
How does it work?
Occasionally when the crypto market makes rapid shifts, arbitrage could come forward as a very rewarding trading strategy. Being in the right place and at the right time is rather considered an important ingredient to the recipe for successful arbitrage trading.
While arbitrage expert continually scans the market for wider price spreads, the matching algorithm runs through millions of potential combinations in an attempt to display the most accurate arbitrage opportunities.
Each arbitrage path goes through a rigorous validation cycle before it is displayed to you. The validation process includes estimating the volume/liquidity for each pair, including the trade fees. This type of approach allows the algorithm to conclude in a much more accurate form.
There are multiple arbitrage strategies that are designed to be executed in different market conditions. Generally, during the active bear market, in order to avoid a sudden portfolio depreciation, it is a common practice to convert crypto pairs to fiat denominator at the end of each arbitrage trading cycle. Should the market suddenly find new lows, your portfolio will remain market risk-free.
Though, when the bulls are holding the flag, the game of trading suddenly shifts and becomes slightly more predictable as well as open for non-fiat arbitrage opportunities.
Arbitrage path is designed to validate opportunities. In fact, many automated arbitrage trading algorithms are specifically built for the Bulls market, where buying on exchange A and simultaneously selling on exchange B takes place for the purpose of increasing the volume.
In spite of its speculative nature, crypto arbitrage has proved to be successful. In the end, it’s a passive way to make some extra money without putting in too much effort – and since the rise of cryptocurrencies, this comes as no surprise. Since digital money is not a subject of social influences and no entity has control over it, people started preferring it because of its potential to increase in value over time.
Reliability of Data
Cryptocurrency space is very volatile; therefore the accuracy of collected data is crucial for the delivery of proper arbitrage quotes. Unlike some tools in the space of arbitrage trading that primarily rely on [ticker last price], Arbitrage.expert goes far beyond by collecting real-time book data and analyzing each quote individually before displaying spread.
What does it mean for a day trader? The last price is simply an indicator of a closing trade, whereas the size remains an unknown factor. Nevertheless, it does not guarantee another execution of a significantly sized order.
For instance, according to the last price a 0.01 BTC ASK order was executed for $9,500, there is absolutely NO guarantee that another ASK order of 1 BTC will be identically priced unless a book is continuously scanned, analyzed and matched with a multitude of available ASK order(s). This approach ensures the accuracy of the quote & eliminates any room for unnecessary errors.
Trading volume is an essential piece of information found in every high-frequency commodity trading algorithm.
When the trading formula is lacking a liquidity component, the outlook becomes inaccurate.