This is the purchase of a coin from platform A at an x value and its immediate resale on platform B at a y> x value, after it has been withdrawn first from platform A and deposited to platform B. Great attention is needed at the following points:
• The required withdrawal fees: In our example with Dash, Cryptopia holds us 0.01000000 Dash, or 0.00071000 Btc. So if we withdraw 1 Dash, our profit will be:
(0.072 -0.071) -0.00071 = 0.001 -0.00071 = 0.00019000
While if we send 0.5 Dash, we have a loss that equals to:
0.5 x (0.072 -0.071) -0.00071 = 0.0005-0.00071 = -0.00021000
(For reasons of simplification, we did not include the trading fees in the above example).
• The wallet status: It’s not a rare phenomenon that the price differences between a platform A and a platform B in which we can buy or sell a coin exist because one of the two wallets is in maintenance, so in fact, we cannot make a transaction. We always check the status of the wallets we are interested in, before we make a purchase for arbitrage.
• The Payment Id: Before sending a coin to a platform, we need to check if a Payment Id is needed – apart from the address - in order to be credited to our account. If so, then we need to make sure that this is also supported by the platform from which we are making the transfer.
• The network mode: The time that the last block created and the estimated time of arrival of the coin on the destination platform.
• The required number of confirmations to complete a coin’s deposit to the destination platform. They usually range from 2 to 200.
• The Market History: If very high sales have already been made at a low price before we make our purchase, then most likely many would have thought like us but before us, so we probably will not succeed in making arbitrage.
• The formation of the Order Book at the destination platform: Large purchase orders and small sell orders of the coin we are interested in are ideal conditions to take the risk sending our coins to the destination platform, while the opposite should prevent us. At this point, of course, we have to assess whether we are in a "normal" market, or one of those characterized by "Bull Traps" or one of those characterized by "Bear Traps".