Quote from: tmfp on July 28, 2014, 01:34:08 PM

Arbitrage is supposed to be pretty much risk free, that's the whole point of it.
Being exposed to a trading loss means that one leg of the arbitrage is being opened or closed at a different time to the other, so effectively they would be "pair" day trading, speculating that the difference between two markets would increase/decrease in their favour over the course of a trading period.
That's not arbitrage, that's conservative day trading, which is presumably why they refer to a 3% stop loss.

On their FB site they say they have $2,000,000 available for trading, so I guess that means they have to give a return on that $2m whether or not they use it all. They also have to pay their overhead.
0.5% per day on $2m is $10,000, plus somewhere I think I have read they take 20% for overhead, so that means to return 0.5% they need to gross $12,000, to return 1% per day gross trading profit $24,000 etc.
Say they can make a $2 per BTc inter exchange arbitrage nett profit after spread and finance costs, that would require a daily trading volume of 12,000 Bitcoins, turning over their $2m about four times, in order to return 1%.

Except that this doesn't happen, because exchange-rate differences tend to be one-sided for most of the time, that is exchange A is cheaper than exchange B almost all the time and the difference rarely reverses. That means that to trade effectively, you keep your coins on B, dollars on A, perform trades and then pump the coins and dollars around. But this means having to go through the international wire-transfer system (twice, since you can't transfer directly from exchange to exchange), which takes many days. That means that when you operate efficiently, most of your dollars are stuck in transit somewhere. Yet these are still investor-dollars that need to share in the profits.

Add to that the fact that Bitcoin-Trader claims to only trade during business hours, which means that they don't automate their trades. Which is, quite frankly, absurd. Arbitrage is a very simple technique that is easy to develop automated tools for that can run 24/7. Now they're supposedly missing out on 75% of the opportunities (40 hours of trading on a 168 hour week).

These things make it all the more obvious that BT is just another Ponzi-scheme. The 120 day lockin period gives them more stability than other Ponzi schemes in the sense that they have plenty of early warning of when potential large withdrawals may come. But it's a Ponzi scheme nonetheless. Sooner or later it will collapse and those that haven't withdrawn their money by then will be left empty-handed.

Mark my words.