Is arbitrage still profitable? and how has your experience been so far running this?
I ran an arb bot for a long time and it was very profitable. I stopped it to pursue more profitable ventures, i monitor the prices a lot still (out of habit) and see a lot of arb opportunities. Good luck to those running the script. The more arbitrage there is, the more efficient the market will become.
Thank you for pointing that out! Since exchanges are not internally arbitrating and there is no open cooperation to create an inter-exchange arbitration system the markets have strange gaps in prices and exchange rates. In an ideal system the prices and rates would automatically even out over all of the exchanges (which could also reduce BTC's price correlation to gox uptime).
Thats the whole idea of people running arb bots, as well as giving them profits, it helps normalise the prices across each exchange. At the moment MtGox still leads price movements.
As for internal arb, an exchange trading on its own books isn't good practise and is a severe conflict of interest as they would easily have the capability to both under cut everyone and perform 'front running'.