<p>I am not an expert on this, but I will answer from my personal experience from the past couple of months. Here are some things I noticed:</p>

<ul>
<li><p>MtGox rules the market. The price there leads and the other exchanges follow. Sometimes TradeHill moves a few decimal points on its own above or below MtGox, but it usually goes back to where it was after a few hours.</p></li>
<li><p>The price difference between exchanges with APIs rarely goes above $0.3 (the most common opportunities are around $0.1/BTC). So with the current fees you will earn very little from each trade - note that on smaller exchanges, it is very easy to move prices up and down so you are doing arbitrage with very small trades.</p></li>
<li><p>You must be fast. There are already people doing this and the opportunities don't stay up for long. If you are not careful your orders will end up pending.</p></li>
<li><p>Exchanges without APIs have much more arbitrage opportunities. Bitmarket for example is some times $1 or more off the current MtGox price. Of couse it is also much more time consuming to arbitrage manually.</p></li>
<li><p>There are days when <strong>nothing</strong> happens and others when <strong>a lot</strong> happens. You have to be ready and keep a lot of money on each exchange if you want to catch it all. There are huge volume differences so you should split your money accordingly.</p></li>
</ul>

<p>I am still testing things out, but I don't think that you can make a lot of money out of this. It may be interesting to use it as a complement to other automated trading strategies though.</p>

<hr>

<p>Just another note:</p>

<ul>
<li>Moving money/bitcoins around to grab opportunities in exchanges with APIs won't work because of fees (even if small) plus waiting time. You usually have a few minutes to grab opportunities. If you are lucky you can sometimes find an opportunity that lasts a couple of hours, but that happens like once a week.</li>
</ul>

<p>All of this is from personal observations during July/August 2011. Things will of course change and the market will probably become more and more efficient.</p>

CC BY-SA 3.0
2011-09-04T23:47:39.783Z
2011-09-05T00:41:11.833Z
2011-09-05T00:41:11.833Z
nmat
<p>See this <a href="http://www.fem.uniag.sk/mefi/pdf/arbitraz.pdf">pdf</a> for more information.</p>

<p>If you were asking about a two currency arbitrage between different markets.  For example, the BTC/USD exchange rate at <a href="http://www.mtgox.com">MtGox</a> and one at <a href="https://intersango.com/">Intersango</a> then the following formulas apply considering brokerage fees at both exchanges.</p>

<p>For simplicity I am using BTC as the base currency and USD as the quote currency, but you can exchange these easily.</p>

<p>Assume:</p>

<ul>
<li><code>A</code> is the exchange rate of BTC/USD on exchange MtGox</li>
<li><code>B</code> is the exchange rate of XXX/YYY on exchange Intersango</li>
<li><code>Fa</code> is the fee of MtGox</li>
<li><code>Fb</code> is the fee of Intersango</li>
</ul>

<p>There is a no arbitrage opportunity if <code>A = B + ( Fa + Fb )</code></p>

<p>But if <code>A - B &gt; Fa + Fb</code> then the the base currency, BTC, is cheaper on exchange B than in A.  So the person would buy BTC on Intersango (B) and sell BTC on MtGox (A).</p>

<p><code>profit = A - B - ( Fa + Fb )</code></p>

<p>If <code>B - A &gt; ( Fa + Fb )</code> then the base currency, BTC, is cheaper on exchange A than in B.  So the person would buy the BTC on MtGox (A) and sell it on Intersango (B).</p>

<p><code>profit = B - A - ( Fa + Fb )</code></p>

<p>Other arbitrage opportunities will exist such as triangular arbitrage.  But those won't develop until the exchanges not only have BTC/fiat currency pairs but other currency pairs as well.</p>

CC BY-SA 3.0
2012-02-19T04:03:13.657Z
2012-03-07T18:44:57.273Z
2012-03-07T18:44:57.273Z
Kevin
<p>There are on occasion decent opportunities for arbitrage if you are willing to go through the hassle for a few bucks.</p>

<p>Here are two data services that are useful:
- <a href="http://nyse-group.de/bitcoin-arbitrage">http://nyse-group.de/bitcoin-arbitrage</a>
- <a href="http://fnoose.com/bitcoin/arbitrage">http://fnoose.com/bitcoin/arbitrage</a></p>

<p>The opportunities are the largest after a sudden move in the price on the leading exchange, Mt. Gox which leaves scraps that can be picked up by performing arbitrage against open orders left on other exchanges.</p>

<p>Of course, to do so means you needed to have funds sitting out there on the other exchanges in order to be among the first with access to do those trades.</p>

<p>The delays in adding bitcoins (waiting for the transfer to confirm) or in adding funds through other channels (e.g., Dwolla transfer) mean arbitrage opportunities might evaporate as those with the open orders become aware that the market has moved and will cancel their orders.  Eventually, in the range of tens of minutes or hours at most decent arbitrage opportunities that yield a few dollars or more will get attention from a trader performing arbitrage.</p>

<p>Because Bitcoin has so many different currency markets, one service that enables the ability to transfer cash out of the exchanges might be useful: <a href="http://en.bitcoin.it/wiki/CurrencyFair">http://en.bitcoin.it/wiki/CurrencyFair</a> CurrencyFair was reviewed recently here: <a href="http://www.bitcoinmoney.com/post/7259588518">http://www.bitcoinmoney.com/post/7259588518</a> 
and Nyse-Group's arbitrage viewer was reviewed here: <a href="http://www.bitcoinmoney.com/post/7000316379">http://www.bitcoinmoney.com/post/7000316379</a></p>

<p>The ability to move funds to and from exchanges, nonetheless movement between exchanges, was a topic addressed by Rick Falkvinge: <a href="http://falkvinge.net/2011/06/10/bitcoins-four-hurdles-part-four-exchanges">http://falkvinge.net/2011/06/10/bitcoins-four-hurdles-part-four-exchanges</a></p>

CC BY-SA 3.0
2011-09-04T23:50:49.700Z
2011-09-04T23:50:49.700Z
Stephen Gornick
<p>After studying Bitcoin Arbitrage for the past few months, I've developed an information service to answer this question.</p>

<p><a href="https://www.cointhink.com">CoinThink.com</a> gives a complete picture of arbitrage. All asks that have a bid at a higher price (on another exchange) are tallied into a total opportunity amount, including the fees for each exchange. It also makes an estimate on the fee for moving money between exchanges. The result is a total dollar amount available for arbitrage.</p>

<p>The exchanges are limited to those that have an automated transfer capability - basically a connection to bitinstant. I am interested in extending the site's functionality to bigger and better information in the future.</p>

CC BY-SA 3.0
2013-01-01T18:14:34.337Z
Any chance to get CampBX on there?
Colin Dean
CC BY-SA 3.0
2013-01-07T21:18:08.650Z
@ColinDean thanks for the suggestion. While I dont think CampBX has enough volume to be interesting to a general audience, next on the todo list is a way for exchanges to be included or not based on user preference.
Don Park
CC BY-SA 3.0
2012-12-31T20:21:16.900Z
2013-01-04T22:53:53.040Z
2013-01-04T22:53:53.040Z
Don Park
<p>I don't know what's the mathematical/economical definition, but I would define "room for arbitrage" as the amount of money that can be extracted from the market by doing arbitrage (between the different exchanges). I am sure there is a precise definition of such a concept.</p>

<p>So, given this definition - how much room for arbitrage do the current Bitcoin markets exhibit?</p>

<p><strong>Edit</strong> - see also on Quora - <a href="http://www.quora.com/How-do-you-measure-arbitrage">How do you measure arbitrage</a>?</p>

CC BY-SA 3.0
2013-08-16T14:34:42.800Z
http://bitcoin-analytics.com/#arbitrage provides realtime arbitrage panel which supports history of arbitrage opportunites between all major markets.
Yevgen Martynov
CC BY-SA 3.0
2011-09-04T23:09:27.770Z
See also http://bitcoin.stackexchange.com/questions/121/is-there-an-efficient-way-to-exploit-arbitrages-between-the-different-exchanges
ripper234
CC BY-SA 3.0
2011-09-05T05:25:45.383Z
This seems like a very time dependent question, doesn't it?
D.H.
CC BY-SA 3.0
2011-09-05T07:45:04.283Z
@D.H. - True, but check out the answers, they contain important timeless information and links.
ripper234
CC BY-SA 3.0
2011-09-05T16:58:26.000Z
Could we at least change the title then? If the answer contains timeless information I'm sure we can make the question more timeless. Perhaps something like: "How can I exploit possible arbitrage opportunities in Bitcoin markets?"
D.H.
CC BY-SA 3.0
2011-09-05T19:56:32.930Z
@D.H. Edited, but not to the title you suggested.
ripper234
CC BY-SA 3.0
2011-09-05T20:24:05.223Z
Good, that's much better.
D.H.
<exchanges><trading><arbitrage>
How can one find how much "room for arbitrage" is there in the Bitcoin market?
ripper234
# How can one find how much "room for arbitrage" is there in the Bitcoin market?

(Asked by: username_0 on 2011-09-04)

I don't know what's the mathematical/economical definition, but I would define "room for arbitrage" as the amount of money that can be extracted from the market by doing arbitrage (between the different exchanges). I am sure there is a precise definition of such a concept.

So, given this definition - how much room for arbitrage do the current Bitcoin markets exhibit?

**Edit** - see also on Quora - [How do you measure arbitrage](http://www.quora.com/How-do-you-measure-arbitrage)?

**Tags:** exchanges, trading, arbitrage

> **Comments:**
> **username_0**: See also http://bitcoin.stackexchange.com/questions/121/is-there-an-efficient-way-to-exploit-arbitrages-between-the-different-exchanges  
> **username_2**: This seems like a very time dependent question, doesn't it?  
> **username_0**: @D.H. - True, but check out the answers, they contain important timeless information and links.  
> **username_2**: Could we at least change the title then? If the answer contains timeless information I'm sure we can make the question more timeless. Perhaps something like: "How can I exploit possible arbitrage opportunities in Bitcoin markets?"  
> **username_0**: @D.H. Edited, but not to the title you suggested.  
> **username_2**: Good, that's much better.  
> **username_1**: http://bitcoin-analytics.com/#arbitrage provides realtime arbitrage panel which supports history of arbitrage opportunites between all major markets.  

---

## 4 answers

### Answer by username_6 on 2012-12-31. Score: 16 | Accepted answer

After studying Bitcoin Arbitrage for the past few months, I've developed an information service to answer this question.

[CoinThink.com](https://www.cointhink.com) gives a complete picture of arbitrage. All asks that have a bid at a higher price (on another exchange) are tallied into a total opportunity amount, including the fees for each exchange. It also makes an estimate on the fee for moving money between exchanges. The result is a total dollar amount available for arbitrage.

The exchanges are limited to those that have an automated transfer capability - basically a connection to bitinstant. I am interested in extending the site's functionality to bigger and better information in the future.

> **Comments:**
> **username_7**: Any chance to get CampBX on there?  
> **username_6**: @username_7 thanks for the suggestion. While I dont think CampBX has enough volume to be interesting to a general audience, next on the todo list is a way for exchanges to be included or not based on user preference.  

---

### Answer by username_3 on 2011-09-04. Score: 16

I am not an expert on this, but I will answer from my personal experience from the past couple of months. Here are some things I noticed:

* MtGox rules the market. The price there leads and the other exchanges follow. Sometimes TradeHill moves a few decimal points on its own above or below MtGox, but it usually goes back to where it was after a few hours.
* The price difference between exchanges with APIs rarely goes above $0.3 (the most common opportunities are around $0.1/BTC). So with the current fees you will earn very little from each trade - note that on smaller exchanges, it is very easy to move prices up and down so you are doing arbitrage with very small trades.
* You must be fast. There are already people doing this and the opportunities don't stay up for long. If you are not careful your orders will end up pending.
* Exchanges without APIs have much more arbitrage opportunities. Bitmarket for example is some times $1 or more off the current MtGox price. Of couse it is also much more time consuming to arbitrage manually.
* There are days when **nothing** happens and others when **a lot** happens. You have to be ready and keep a lot of money on each exchange if you want to catch it all. There are huge volume differences so you should split your money accordingly.

I am still testing things out, but I don't think that you can make a lot of money out of this. It may be interesting to use it as a complement to other automated trading strategies though.

---

Just another note:

* Moving money/bitcoins around to grab opportunities in exchanges with APIs won't work because of fees (even if small) plus waiting time. You usually have a few minutes to grab opportunities. If you are lucky you can sometimes find an opportunity that lasts a couple of hours, but that happens like once a week.

All of this is from personal observations during July/August 2011. Things will of course change and the market will probably become more and more efficient.


---

### Answer by username_4 on 2012-02-19. Score: 5

See this [pdf](http://www.fem.uniag.sk/mefi/pdf/arbitraz.pdf) for more information.

If you were asking about a two currency arbitrage between different markets. For example, the BTC/USD exchange rate at [MtGox](http://www.mtgox.com) and one at [Intersango](https://intersango.com/) then the following formulas apply considering brokerage fees at both exchanges.

For simplicity I am using BTC as the base currency and USD as the quote currency, but you can exchange these easily.

Assume:

* `A` is the exchange rate of BTC/USD on exchange MtGox
* `B` is the exchange rate of XXX/YYY on exchange Intersango
* `Fa` is the fee of MtGox
* `Fb` is the fee of Intersango

There is a no arbitrage opportunity if `A = B + ( Fa + Fb )`

But if `A - B > Fa + Fb` then the the base currency, BTC, is cheaper on exchange B than in A. So the person would buy BTC on Intersango (B) and sell BTC on MtGox (A).

`profit = A - B - ( Fa + Fb )`

If `B - A > ( Fa + Fb )` then the base currency, BTC, is cheaper on exchange A than in B. So the person would buy the BTC on MtGox (A) and sell it on Intersango (B).

`profit = B - A - ( Fa + Fb )`

Other arbitrage opportunities will exist such as triangular arbitrage. But those won't develop until the exchanges not only have BTC/fiat currency pairs but other currency pairs as well.


---

### Answer by username_5 on 2011-09-04. Score: 5

There are on occasion decent opportunities for arbitrage if you are willing to go through the hassle for a few bucks.

Here are two data services that are useful:
- <http://nyse-group.de/bitcoin-arbitrage>
- <http://fnoose.com/bitcoin/arbitrage>

The opportunities are the largest after a sudden move in the price on the leading exchange, Mt. Gox which leaves scraps that can be picked up by performing arbitrage against open orders left on other exchanges.

Of course, to do so means you needed to have funds sitting out there on the other exchanges in order to be among the first with access to do those trades.

The delays in adding bitcoins (waiting for the transfer to confirm) or in adding funds through other channels (e.g., Dwolla transfer) mean arbitrage opportunities might evaporate as those with the open orders become aware that the market has moved and will cancel their orders. Eventually, in the range of tens of minutes or hours at most decent arbitrage opportunities that yield a few dollars or more will get attention from a trader performing arbitrage.

Because Bitcoin has so many different currency markets, one service that enables the ability to transfer cash out of the exchanges might be useful: <http://en.bitcoin.it/wiki/CurrencyFair> CurrencyFair was reviewed recently here: <http://www.bitcoinmoney.com/post/7259588518>
and Nyse-Group's arbitrage viewer was reviewed here: <http://www.bitcoinmoney.com/post/7000316379>

The ability to move funds to and from exchanges, nonetheless movement between exchanges, was a topic addressed by Rick Falkvinge: <http://falkvinge.net/2011/06/10/bitcoins-four-hurdles-part-four-exchanges>


---

