Re: Butter Bot!: New Bitstamp, BTC-E, and MtGox EMA Trading Platform
In regards to your request for feedback --- while an arbitrage bot could be very profitable, the issue that we face is the extraction of the funds to place them back into another exchange to permit the arbitrage to work. If we look at MTGOX for example, the time frame for withdrawing funds could be forever and recently there have been several posts about not being able to withdraw BTC's for a variety of reasons. The arbitrage bot would be an alert system and therefore the actual moving of BTC's and funds in an out of exchanges would be up to the customer (time consuming). The profits would also be eaten up (factoring in trading fees and other fees associated with the depositing of funds into financial entities to get the funds into a BTC exchange of course a great arbitrage spread could make up for that, but how often would those opportunities surface).
Not true. As someone who does it manually, there is more profit in arbitrage then there is in trading right now; it is just time consuming and a lot of work. A bot would change this.
Alts are what makes arbitrage fast & easy. You will notice that exchanges that support alts stay pretty close. As they drift apart, there is too much profit to be made through arbitrage using alts for them to stay that way long. This is healthy for the market, and very profitable for those with arbitrage bots. _I want one!_
Based on GOX's announcements, their next generation trade engine will support at least LTC. This opens a massive opportunity for arbitrage profit, and will cause GOX's price to quickly equalize with BTC-e & the other alt-supporting exchanges and stay there. Those with a bot ready & waiting for this stand to profit nicely, and the volume difference between GOX and the others will mean profits will continue as arbitrage brings the rest of the exchanges into step with GOX as it moves up & down.
At last check, there were literally hundreds of stock-bots... and have been for a long time. I have played with stockbots over the years, and can purchase them at will. What I have not found is a good (read "safe) release of an arbitrage bot. This so far is a closely guarded profit maker, & I want in.
Hi Sean,
Thank you for sharing your thoughts. Based on what you've shared I have to reconsider my opinion. I did not give enough thought about an arbitrage opportunity involving the alt coins.
Thanks.
To further develop this, how do you guys visualize the mechanics of such a bot?
As Pangia noted, extracting funds through wire would be very difficult to automate so I imagine we would need to do all our trading in crypto-coins?
Example: Buy BTC in Gox, Sell for LTC in BTCE.
With LTC in BTCE, wait for profit opportunity and sell those for BTC in Exchange X for net profit?
Pablo.