Eyy, it's a new word.

Arbitrage trading is an amazing way to make some free money very fast.

For the purpose of this post, I have actually devoted about $60 worth of Bitcoin. I arbitrage traded it on about 3 exchanges and that figure moved up to $80.

Fees aside, I had $75 worth of Bitcoin sitting in my account. I will explain in detail exactly how I did it. And then you can decide if it's right for you.

Arbitrage trading is simply trading cryptocurrencies on more than one exchange due to a difference in price.

Assuming you buy Bitcoin from Coinbase at $8600 and you check Binance and you see that it's trading for $8800 there, you can send your BTC that you bought from Coinbase to your Binance wallet and sell it there for a higher price.

If you bought 1BTC, your profit on such a trade would be $200 gross. Net profit would be gross profit minus fees.

As you can see, it's pretty straightforward.

Now most people who explain this type of trading to you don't usually tell you the caveats.

There are a few, and I'll list them below.

• No one ever mentions fees: They just paint a very beautiful picture of how sending and receiving bitcoin through arbitrage trading is. No one ever remembers that you pay sending fees from your original wallet, trading fees on both your original and arbitrage wallets and sending fees to your original wallet. You might even pay a receiving fee if your wallet provider is that wicked.(I'm looking at Luno here)
• No one ever mentions transaction times: Have you ever gotten your BTC an hour later? I have. I really thought I screwed up that day. Especially if your transaction is really small, it can take anywhere from 15 minutes to an hour to receive your BTC into your wallet. The price might have changed in that time, making the whole process completely useless. In fact, if the price changed for the worse, you'd actually be running at a loss due to all the fees you paid. Does it still seem like magic?
• You could mess up your trades: This is not going to happen to many people, but some people may not calculate everything correctly and might end up running at a loss after the whole process.
• Prices aren't always that far apart: It hardly happens that prices are $200 apart on different exchanges. I mean HARDLY. If you wish to do this full time, ensure to consider this.

With all those caveats listed and explained, let me explain the benefits of arbitrage trading and why I do it personally.

• You can make some quick extra cash if you're fast: it's a really fast way to make money. What I personally do is that when I sense that prices will be different in two exchanges due to dropping of volume on one exchange, I send my BTC from the lower volume Exchange to the higher volume exchange. So I already have my coins there before the price changes.
• It doesn't need any special skill: You literally need no skills except the ability to see a difference in numbers. It really can't be that difficult.

So that's that about arbitrage trading! Would you do it or not? And why?