Quote from: cozytrade on September 10, 2014, 08:16:32 PM

Quote from: vach on September 08, 2014, 05:08:49 AM

Regarding arbitrage i have explained it before on this forum, in short you never move fund from one exchange to other. Think that you can only trade in both, in that case you only need prices to vary on both exchanges. Challenge yourself and try to figure it out.
You only consider one price against other, I'm doing that myself but there are lot of space for optimization, and that's the hardest part.

So you think bitcoin-trader.biz is optimising hardest part? Sorry missing the point.

what Vach is saying here (and getting wrong btw) is that he is alluding that arbitrage traders NEVER move funds between accounts and that's just patently wrong.

the way REAL arbitrage works is by putting funds in multiple currencies into different exchanges like such;

Coinbase = $5000USD / 10BTC
Bitstamp = $5000USD / 10BTC
etc... etc...

when coinbase has BTC for say $510 and bitstamp has BTC for $500 the arbitrage trader sells 1BTC for $510 on coinbase and buys 1BTC on bitstamp for $500, with a net gain of $10, and so on and so forth...

thats how arbitrage works and it can be done with multiple currency pairs across an unlimited number of exchanges and can be done with altcoins in the mix as well. there is a HUGE market potential in cryptocurrency arbitrage.

the MAGIC (and what vach is missing) is that this cannot go on indefinitely. you MUST rebalance your accounts at some point in order to maintain your ability to trade. and this is where wire transfers and ACH transfers come into play.

for a trader to be really effective he has to have enough flow between banks to keep his trading accounts flush with funds. the more you have the more you can absorb slow transfers between banks.

for rebalancing the crypto accounts it is easy... we all know how fast and simple that is. but for the cash it is harder and this is the number one reason why an arbitrage trader NEEDS larges amounts of capital to work with.

trying to arbitrage on $10k would take you a million years to make any real money. arbitraging on $5m and now you got something.

the HARD part is the efficiency of your rebalancing at the end of the trading day or week or month or however long you have funds to keep you moving. the more money you have the more "efficient" you are.