Best auto crypto arbitrage trading strategies for highest ROI

Automated Crypto Arbitrage Trading Bots for Binance and Kraken

Welcome, to our article about the automated crypto arbitrage trading bots for Binance and Kraken

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

To break this down we have the following headlines

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

What are Crypto Trading Strategies?

What are crypto trading strategies and what different strategies are there?

You can make profit in many different ways with different trading strategies. Some examples are

  • Arbitrage trading
  • Scalping trading
  • HODL
  • Swing trading
  • Day trading

If you are more interested in how to do scalping crypto trading or day trading cryptocurrencies we have dedicated articles for this. For example, see the best crypto trading exchanges for swing trading or best crypto trading exchanges and bots for day 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. 

Best auto crypto arbitrage trading strategy and highest ROI

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.

 

Coinrule logo

Cryptohopper 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.

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 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 auto 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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