Cryptocurrency trading is a lucrative and relatively safe way to make money, but it can be risky if you don't have the right strategy. Slippage is one of the main risks associated with crypto arbitrage trading, as it refers to the difference between the expected price of a trade and the actual price at which the trade is executed. To reduce this risk, traders must have a good arbitrage strategy and use the best platforms for their trading. On centralized cryptocurrency exchanges, slippage is the least likely in the most traded pairs.
The only way to remove it is by placing limited orders, which only run at a predetermined price since you specify the maximum price to pay or the minimum price to sell. However, there are two main drawbacks: due to a lack of liquidity, limit orders are not processed at all; and even if they are, they may remain unfulfilled. Other measures that adjust slip tolerance, avoid peak times, and divide large operations into parts can reduce, but never eliminate, risk. Arbitrage opportunities are common on decentralized exchanges or automated market makers (AMMs), who discover the price of cryptocurrency pairs with the help of automated, decentralized programs called smart contracts.
Triangular arbitrage exploits the inefficiencies in the price between several cryptocurrency pairs that are traded on the same exchange. If you're looking for a way to start an online business as a cryptocurrency trader, you might want to consider using the arbitrage strategy as a less risky strategy. Crypto arbitrage seems to remain a viable strategy for making money, despite some difficulties such as greater regulation and greater volatility. This creates a perfect opportunity for arbitrage trading, as the price of cryptocurrencies can vary from exchange to exchange.
In addition, it's important to note that crypto arbitrage trading is very risky and can only be attempted by veteran traders with adequate capital. Arbitrage trading is one of the few strategies that can guarantee profits regardless of market direction or condition. Here are some of the best platforms for arbitrage trading that you can use to start your online business as a cryptocurrency merchant:
- Binance
- Bitfinex
- Kraken
- Bitstamp
- Coinbase Pro
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