Hello,
Bouncing on Joseph's answer I have a few interrogations:
When you say the price might move between the moment we buy on one exchange and sell on the other you mean between the time we click on the button ?
I am not sure I get it right. If I buy a btc at 4000usd, even if the transaction takes a few hours to get verified and the btc to appear in my wallet, I will still have paid 4kusd for a bitcoin right ?
And if I short (of the exchange allows it) a btc on the other exchange for 4200usd, all i need is to transfer the btc from one wallet to the other and that should do it right ?
(All fees set aside)
Where do I get it wrong ?
The thing is time to transfer is not in your control.. Also, many Bitcoin websites doesn't let you withdraw in real time....
I liked this answer the best:
You should have an equal balance between two exchanges like you have 1 BTC in first exchange and 1 btc in second exchange and equal amount of fiat as well in two exchanges. If ever you see that one exchange has the lowest ask price amounting to $3,700, you buy it at that amount and then you see in another exchange it has the highest bid price amounting to $3,900 so you sold your bitcoin to that amount. You can do it immediately since you already have the balance of both fiat and bitcoin in two exchanges.
After the orders are filled, you can then send the bitcoin to one exchange and the fiat to the other so that it will be balance again and you already have a gain of $200 without transaction fees. You should not arbitrage like buying one currency then send it to other exchange to sell because it would take time and price might already change before its received and worse you will lose because of it.