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Automated Crypto Arbitrage Trading Bots for Binance and Kraken

Welcome, to our article about the automated crypto arbitrage trading bots for Binance and Kraken. Binance are Kraken are among the largest and best Bitcoin and altcoin crypto exchanges.

We will focus on crypto trading bots with an arbitrage function.

To break this down we have the following headlines

  • What is an auto crypto arbitrage strategy?
  • Best auto crypto arbitrage trading strategy and highest ROI
  • Risks with auto crypto arbitrage trading

What is Auto Crypto Arbitrage Strategy?

There are basically 2 different ways to execute your crypto arbitrage trading strategy.

Auto VS non-auto trading strategy

  1. Auto trading means that you trade manually which means you sit an click in front of the computer or mobile device.
  2. Non auto trading means that you set up predetermined rules and let a bot trade automatically for you once any of these rules are triggered by the market.

Almost any crypto trading strategy is possible and maybe even preferably to automate with a bot.

What is arbitrage trading?

An auto crypto arbitrage strategy is a computer program that examines and compares coin prices across exchanges in order to make automated trades that take advantage of price discrepancies.

For example, a Bitcoin arbitrage trading bot might identify that BTC is trading for $50.000 on Kraken and $50.100 on Binance.

This will trigger the bot to buy ETH on Kraken and quickly sell it on Binance in order to make a small profit.

See example illustrated in the picture below.

  1. Alice deposit $5.000 to Binance and buy 0.1 Bitcoin
  2. Alice transfer 0.1 BTC to Kraken and sell it for $5.010
  3. Now, Alice and transfer the $5.010 back to Binance and buy 0.1002 BTC
Of course, this method is not applicable for small transactions since there are fees involved in all these transfers. Also, the method must be automated by trading bots because the prices change very fast and you can miss the arbitrage opportunity by being too slow.
 
Therefor, arbitrage trading is commonly leveraged by hedge funds and large institutional investors since the fees are lowered if you trade large volumes. For example, with Binance you can come down to 0% in trading fees on the spot market and even minus if you are trading futures denominated in BUSD. Read more about Binance trading fees.

Best Automated Crypto Arbitrage Trading Bots

In the table below we have listed the best auto crypto arbitrage trading bots allowing for arbitrage strategies which can yield a high ROI.

Also, don´t forget to read and understand all the risks associated with crypto trading bots and arbitrage trading which we have addressed further down in the article.

In order to make successful arbitrage bot you need to find:

  • Crypto exchanges with extreme low fees since each trade will gain a very small percentage
  • A central software allowing you to trade on multiple large exchanges with a lot of liquidity and low spreads. It takes too much time to move the funds around yourself so you need to operate from a single software handling multiple accounts

Check our article about crypto trading platforms with the lowest fees to find a good trading platform.

As you can see below, both Cryptohopper and Coinrule let you connect to several crypto exchanges and both supply you with automated arbitrage trading bot templates.

cryptohopper crypto trading bot logo 2
Coinrule logo

Cryptohopper Crypto Trading Bot - Arbitrage Strategy

Cryptohopper crypto trading bot let you copy traders, manage all your exchange accounts in one place, use market-making and exchange/market arbitrage and simulate or back-test your trading strategies. Cryptohopper has many pre-programmed crypto trading bot templates you can use, including arbitrage templates.

With Cryptohopper you can do exchange arbitrage between exchanges without sending funds from one exchange to the other.

Connect your exchanges with funds via an API. Enable Exchange Arbitrage and let your Cryptohopper automated bot search for arbitrage opportunities.

In addition, you get fast automated trading, and portfolio management for Bitcoin, Ethereum, Litecoin, and 100+ other cryptocurrencies on the world’s top crypto exchanges.

Supported exchanges are Binance, Binance US, Kraken, Crypto_com, Kucoin, Bitfinex, Bitpanda pro, Coinbase pro, Bittrex, Poloniex, EXMO, Huobi, and OKEX.

Read more about the Cryptohopper arbitrage trading strategy

Coinrule Crypto Trading Bot - Arbitrage strategy

Coinrule is a crypto trading bot and platform which empowers traders to compete with professional algorithmic traders and hedge funds. With Coinrule there is no coding expertise required and there are already pre-programmed arbitrage templates.

Supported exchanges: Binance, Binance US, Poloniex, Bitpanda Pro, Coinbase Pro, Bitstamp, HitBTC, Kraken, Liquid, OKex

Risks with Automated Crypto Arbitrage Trading

As for any investment, there are risks associated with auto crypto arbitrage trading with bots.

However, if you are aware and address the risks it´s much higher probability that you can actually manner the risks and quantify them.

Here are some risks we have identified

  • Execution risk – Arbitrage opportunities are short lived and you almost have to execute the trades simultaneously 
  • Uptime – Since you interact with one seller and one buyer on 2 different exchanges at the same time all things must be connected and no downtime is allowed. In addition, you probably use a crypto bot software to perform your arbitrage strategy.
  • Counterparty risk – Since you have to deal with one buyer and one seller at the same time there is always a counterparty risk
  • Liquidity risk – If you buy a crypto on one exchange the same position must be liquid to sell on the other exchange.
  • Exchange fees – Arbitrage trading involves a lot of transactions with a small portion of profit on each trade. There is a risk the fees will eat up all profit.
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