Best Cryptocurrency Arbitrage Bots 2024



We will discuss how to pick a good arbitrage bot for crypto and which qualities you should look for in a provider of automation services. However, the first thing that you need to learn about this particular topic is what arbitrage means.

Arbitrage is a very old technique that has been around since the inception of commodity markets. It is possible to use arbitrage even in barter (a kind of trading involving only goods and services) if you understand the value of goods in relation to each other. A contemporary crypto arbitrage bot is a specialized script that can automate the process of finding profitable deals that work 100% of the time.

An idea behind a Bitcoin arbitrage bot is to exclude any errors that can occur due to the human factor and immediately react to conditions that allow for arbitrage. Such bots need to be extremely efficient, fast, and consistent due to the so-called price convergence which is the biggest risk in running arbitrage-oriented strategies.

What are arbitrage and the history behind this method?

The origins of this particular trading method are ancient with the earliest references to operations involving several goods going back to 2000 years BC. Traders back in that period faced a myriad of issues. Modern solutions for many of them changed the way we perceive arbitrage, its advantages, and disadvantages.

Ancient traders struggled due to several key reasons:

  • The difficulty of obtaining information and maintaining its relevance. Since many merchants had to travel over long distances and did not have any special ways to communicate, market prices could be outdated by the time they arrived.
  • Low liquidity. Even if a merchant could obtain enough goods to make a profit, it could be impossible to sell them for a good price due to the lack of demand or insufficient funds on the part of buyers. The problem with liquidity was acute.
  • Unpredictable political and economic situations. Wars, diseases, and changes in policies were sudden and created issues that could not have been foreseen by traveling merchants further increasing risks.

Ancient businessmen tried to combat these issues by building sprawling networks of trading posts alongside lively trading routes and creating specialized unions to control prices. These approaches worked quite well and allowed many to use arbitrage efficiently. The method was further boosted by legislation such as The Code of Hammurabi.

However, the modern understanding of the method and its name were first used by the French economist and writer Mathieu de la Porte at the beginning of the 18th century. He described a variety of financial operations and their purposes. We still use his works to study the market and arbitrage in particular.

Before contemporary crypto arbitrage bots and other automated solutions, people tried to create algorithms helping them take advantage of differing prices in markets separated by long distances. This approach has been working quite well for many international traders.

The modern way of using arbitrage

The simplest way to describe this method goes like this:

  1. Two or more markets must share a common commodity or asset.
  2. Prices must be different in each market to create a visible disparity.
  3. An operation must be conducted in multiple markets simultaneously.

There are multiple advantages to this method. They make arbitrage virtually risk-free if you identify a good opportunity to make transactions at the same time. In the middle ages, merchants used messengers who traveled on horses and changed them often. Messenger pigeons were also employed by many traders.

At the start of the 20th century, many traders used telegraphs or even telephones to communicate and coordinate purchases in markets separated by huge distances. It was this period when price convergence became a great risk for anyone engaging in arbitrage.

Nevertheless, the method had apparent benefits that many experienced merchants recognized:

  • Transactions do not have any negative cash flow. Since two operations involving a single commodity are conducted simultaneously, traders make profits instantly without experiencing any negative movements of cash.
  • The method is 100% reliable in stable environments. One of the biggest risks of arbitrage is a sudden devaluation of currency used as the main exchange medium. For example, the depreciation of the US dollar can be devastating to someone working with this particular fiat currency and locked in two transactions involving it.
  • Exclusion of risks related to seasonal price changes. A fundamental condition of an arbitrage deal is that the price is not equal to any future price. It means that you secure your profit at this current moment without exposing yourself to risks associated with price changes.

Dangers of using arbitrage

Multiple risks are associated with using this technique. In theory, when ideal conditions for arbitrage occur in the market, it is impossible to lose money in a trade. However, there are still some problems that many retail traders encounter. Some risks are more influential when it comes to trading cryptocurrencies and other digital assets.

  • Price convergence. The most obvious risk with the strategy is the flattening of prices across multiple markets which leads to the impossibility of even using arbitrage in the first place. Convergence happens due to multiple simultaneous trades happening in short succession allowing all market participants to quickly find the right price for the asset. Since you are buying and selling at the same time, you drive prices in the same direction across the board.
  • Currency depreciation. Even the best crypto arbitrage bot won’t save you from a sudden devaluation that may occur in many markets at once. For example, you can use arbitrage to accumulate Bitcoin which is a highly volatile asset that may lose and gain value within a single month. The unpredictability of the asset leads to issues for retail traders who want to make money in the short term since any negative price change will impact their bottom lines.
  • Market volatility. It is a big problem for people who work in fast-paced markets. Cryptocurrencies are traded instantly around the clock meaning that any delay in order execution may lead to significant capital losses. Prices in the cryptocurrency domain change regularly and lead to problems with arbitrage and triangular arbitrage.
  • Barter-like nature of the market. This problem is closely associated with the cryptocurrency market specifically since many assets are traded against each without referencing a common exchange medium. It is much like trying to outsmart everyone by trading oil against gold without using the US dollar. You must be aware of price fluctuations and relations between different digital assets to reliably make a profit.

Why do we use cryptocurrency arbitrage software?

Automation is perfect for arbitrage due to multiple reasons. However, there are also general benefits of using crypto arbitrage software and automated trading systems. Let’s start with some upsides of using these instruments:

  • Bots will work around the clock. One of the best things about machines is that they can work without ever tiring, sleeping, napping, eating, or anything else that could slow down their performance. Since the cryptocurrency market works 24/7, you need a bot to keep track of prices and market situations at all times!
  • Bots never make mistakes. The human factor is the driving cause of errors in financial markets. People tend to hesitate, second-guess their judgment, misclick, and make other types of mistakes that can be costly when it comes to trading financial instruments. A machine does not have such problems. It just works.
  • Automation is affordable. At the beginning of the 1990s, only huge financial institutions, banks, and fund managers had access to robots. Today, everyone can afford a fully automated trading system for a very low price. It seems that excuses for not using a bot quickly disappear!

While these advantages are quite compelling, there are even more important benefits to using automation in strategies like arbitrage or DCA buying which are risk-free or low-risk investment ventures.

Here are some of the advantages of using a cryptocurrency arbitrage bot:

  • Non-stop price surveillance. It is hugely important for any retail trader to closely monitor prices in multiple markets simultaneously if they want to focus on arbitrage. Since prices change constantly and you may find a good opportunity for a deal at any moment, it is necessary to continuously track all prices around the clock. An arbitrage crypto bot can do just that.
  • Instant order placement. As long as you work with a centralized exchange that supports instant order execution, an arbitrage bot for crypto will never experience a delay. It means that it will buy and sell digital assets at the same time and reduce the exposure of your portfolio to risks related to price changes.
  • No hesitation or judgment lapses. When a human tries to monitor multiple exchanges at once, they can contemplate for too long or double-check prices before acting. These tiny pauses can be detrimental to the success of an arbitrage strategy. Bots do not think. They just act according to their instructions and make it possible to earn money on arbitrage even during occurrences of the tiniest price discrepancies.

Retail traders interested in making money by seeking and acting on arbitrage opportunities cannot compete with the market without using advanced forms of automation. However, you need to pick the right automation vendor to ensure the success of your investment endeavors.

How to pick the best crypto arbitrage bot

The first readily available mass-market automation products were invented during the era of the Forex craze when individual retail investors could focus on trading in a fast-paced financial market working around the clock. Since then, the industry has changed dramatically with many companies offering outstanding bot products for a fraction of the price remembered by old-school investors.

Contemporary automation vendors have diverse product lineups, fully customizable scripts, and work without any downtime. The latter is possible thanks to the advancements in the cloud computing industry which offers online-only platforms to operate without any hiccups or pauses. With a 99.9999% uptime, a good automation vendor can guarantee you that your bots will never miss a valuable opportunity to open a market position.

Picking the right provider for services that allow for Bitcoin auto trading and other forms of automation can be challenging. While the diversity of the market is a great advantage, you need to be able to pick a good cryptocurrency arbitrage website that offers excellent service and intuitive products that can be used even by users without any technical know-how.

Here are the qualities of a company that will give you the best user experience:

  • The diversity of the product line. One of the biggest problems that some retail traders have is that they do not have the necessary set of skills to build custom automated trading systems. It means that they need preset arbitrage crypto trading tools that can be deployed and maintained without user inputs. WunderTrading offers a wide range of preset bot products that help users achieve consistency.
  • Excellent customer support. An arbitrage robot is a complex system that requires some fine-tuning. A good provider will give you detailed tutorials, video lessons, and step-by-step guides, but it must offer other forms of education and support. Search for providers that quickly answer inquiries from users and have dedicated staffers who work with clients around the clock.
  • Exceptional UX/UI. People without any experience with services offering automated trading systems believe that they need to learn how to code or have the technical expertise to build and run bots. However, a good automation vendor will provide an intuitive interface to its users so that they can build an arbitrage bot for Bitcoin without any additional assistance if they invest some time and effort in learning the platform.
  • Fair pricing. It can be hard to identify the right amount of money that should be paid for a niche service like trading automation. Investors interested in building an efficient and reasonably priced automated trading system must look for companies that offer discounts, affordable plans, and free samples. For example, WunderTrading allows all its registered users to run a crypto arbitrage bot for free (you can have up to five different bots simultaneously).

Look for companies that check all of these boxes and offer an outstanding service. You will have a great experience and create a consistent strategy with a company that can deliver on all fronts.

Which digital assets are the best for arbitrage?

This investment approach requires its targeted assets to have some distinct properties:

  • High liquidity. As mentioned previously, one of the biggest issues that some traders encounter when attempting to arbitrage is insufficient liquidity on one front of the deal. Imagine that you want to buy Bitcoin on Binance and instantly sell it on KuCoin to pocket a difference, but what if KuCoin does not have enough liquidity to cover a short market order? You will be stuck with assets and lose money on any price movement.
  • Popularity. Digital assets must be traded on multiple exchanges or have enough people interested in swapping them for other assets for additional liquidity or easy triangular arbitrage (when you trade on the same exchange but using three or more cryptocurrency pairs). Look for assets supported by multiple wallets, centralized exchanges, decentralized exchanges, and applications to ensure that you have a wide spectrum of prices to track.
  • Stability. Traded assets must be liquid and stable. Volatility will expose your portfolio to unnecessary risks and may not provide a stable enough environment for arbitrage to work. You should focus your attention on established digital assets. A good coin arbitrage bot will monitor tokens that do not lose or gain value unpredictably.

Where to deploy your arbitrage bots for crypto?

Choosing the right exchange is also quite important for retail traders interested in using crypto arbitrage software. There are several important qualities that an exchange suitable for arbitrage trading must have:

  • Sufficient liquidity. While many centralized exchanges have enough traders and available capital to make most trades happen, they also must have liquidity for specific digital assets that you want to focus on.
  • A functional API. Centralized and decentralized exchanges that have an API allow third-party providers to effortlessly connect to the service bypassing the user interface. It means that an exchange can be integrated with analytical platforms and automation vendors.
  • Reliability. You don’t want to work with an exchange that has a questionable track record or lacks customer support, or has any other problem with the service. Choose companies that have positive user reviews, brand recognition, and products praised by experts and clients.

Good customer support, diverse banking options, quick service, and other qualities should be considered too. Let’s talk about some companies that should be on your radar.

Binance arbitrage bot

This centralized exchange is the biggest in the crypto industry with millions of customers from across the globe and offices in hundreds of countries in Europe, Asia, and the Americas. By some estimates, Binance has a massive 17% market share dwarfing its competitors and offering services to a large audience of institutional and individual investors.

Undeniably, Binance has the best liquidity and one of the most diverse catalogs of financial instruments. If you are interested in arbitrage, you need to include this exchange in the list of monitored markets to make sure that you have sufficient liquidity on at least one platform to finalize any deal quickly and reliably.

Kraken arbitrage bot

This exchange is focused primarily on the US market and caters to a very active client base. If you want to have an exchange that reflects regional prices, working on Kraken is a must. Here, you will find many traders who do not expose themselves to other regional markets like South-East Asia or Europe. It means that you may find good opportunities for spatial (geographical) arbitrage.

Kraken is a reliable platform that offers high security, quick service, and impeccable customer support. With the current evaluation of over $10 billion, it is also one of the best-funded platforms in the whole crypto industry.

Poloniex arbitrage bot

We cannot say that this particular exchange has the best safety or offers weak customer support, but it is one of the platforms that cater to individual retail traders interested in an acceptable level of service for a low price. With fees starting at 0.155%, it is one of the cheapest platforms for retail traders. It means that you can find a good opportunity to make money on arbitrage by using this platform for some exchanges and paying tiny fees.

The problem with this company is the level of support with some questions hanging without any answer for hours. Another issue is the history of issues with security. The company was hacked two times with combined losses of over $8 million.

Ripple arbitrage bot

If you are interested in running an automated crypto arbitrage system, you may not be able to integrate Ripple since it is not exactly an exchange but a transaction settlement system. Think of it as a VISA of the crypto industry. Nevertheless, prices here may vary depending on multiple factors. If you are quick enough, you can take advantage of price discrepancies between Ripple and other exchanges.

It is not the best choice for people interested in Bitcoin arbitrage software, but it is certainly an interesting platform for crypto users and some retail traders who are ready to monitor prices on multiple wildly different platforms.

Should you use robot arbitrage for crypto?

This approach is certainly one of the best for people who are willing to patiently wait for a perfect opportunity to make money. If you find ideal conditions for a trade, you will make money without taking on any risk. The whole approach seems to be made for an arbitrage robot that will monitor prices without any pauses or judgment lapses.

If you have an account at WunderTrading, you can set up a multitude of ETH, LTC, USDT, and BTC arbitrage bots. They will be working around the clock and instantly make a profit when perfect opportunities present themselves. It is not something that happens often, but it is still a good way to reliably make some money while engaging in other investment endeavors.

Automation is an excellent tool for contemporary retail traders who want to be as efficient as possible. Many automated trading systems require users to come up with sophisticated technical analysis methods or copy the actions of other experienced traders. This approach inherently carries some risks associated with the human factor. Arbitrage is a different thing.

When a good arbitrage opportunity occurs, it is a guaranteed small profit that you can pocket and continue doing other investment routines. An arbitrage robot is a great addition to your portfolio that can dramatically improve its overall performance.

If you can afford to run multiple bots simultaneously, it would be unwise to exclude arbitrage bots from the portfolio while focusing on other forms of automation. These robots can reduce the total risk and hedge other forms of investments!

The main takeaway

Contemporary retail traders should use arbitrage since it is a system that you need to set up and tune once. It will continuously seek perfect conditions for trade and make money consistently. It should not be the main source of income generated by your crypto portfolio. Instead, it must offset risks that are generated by other investments in the cryptocurrency market.

Choose the best arbitrage bots from providers like WunderTrading and focus on building a balanced portfolio with controllable risks and predictable performance.


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