This one trick made me $500 last night!
Yeah, clickbaity headline I know, but lately it seems to be the only way to get attention around here.
So here's the deal...
A couple of days ago I predicted an impending ETH crash,
https://steemit.com/money/@williambanks/hold-onto-your-hats-next-few-days-are-wild
This crash has not happened... yet. But I'm still convinced it will.
What I failed to consider was that while many exchanges would take two days or more to hop back into ETH, some would resume trading with nary a hiccup. I'm still confident that what I predicted to happen will happen and I have a large open short on ETH right now because of it.
But this is about Steem and how I made $500 last night almost effortlessly. As it turns out, Steem Backed Dollars or SBD presently have a 30% premium at poloniex. This premium tells us something about the mindset of the market place.
Steem backed dollars are guaranteed to always be worth about a dollars worth of steem. But no such guarantee is being made against BTC. People are buying SBD at a premium of 30% because they want a safe haven and believe BTC will fall.
In otherwords, SBD is being used as hedge against volatility in BTC price. Normally you could use bitUSD for this since it rarely carries so much of a premium, but for some reason the bitUSD orderbook depth just isn't there so this is what I did.
I took the $90 SBD I earned here from blogging, posting and voting. Sold it for a 30% premium into BTC at Poloniex. I took the BTC to opneledger, traded it for BTS, then traded the BTS into steem and SBD. Rinse, Repeat!
Doing this 5 times netted a total profit of $500 USD and the best part is that is is all money I earned from talking about steem on steemit! That's a completely clean and legit profit of $100 USD for each day I've been into steem.
I did this by trading across polo and openledger and while the spread has narrowed to the point this isn't profitable right now. If the price of steem in BTC terms keeps coming down, the window will open back up. Best part is I spent most of the time training bots, so now I've got bots watching this pathway and they can take advantage the second it opens up again. Hurray for hands free profit!
See what you're doing when you do this, is trading on investor sentiment. The people trading at openledger and the people trading at poloniex have completely different outlooks on these coins and it's reflected in the spread. You need a few legs on the spread to make it worthwhile which really complicates things. But all in all I spent 8hrs trading and made $500 and my charts are showing this sort of thing actually happens all the time on pairs between openledger and polo, you just need the tools to find these windows and execute the trades.
Steem is crashing right now, but only because steemit has closed their doors to new signups.
You can use this knowledge to make some quick profits. I believe the next big window is going to be from ETH to SBD and if I'm right it will open up in the next 24hrs and close some time in the following 48hrs.
What do you think? What's the most clear profit you've made doing trading by hand or by bot?
I never understand when there is a chance to make money and when there is not in arbitraging. Do you have a formula to calculate if its worth it to apply your system?
So what I do is I look for the really obvious opportunities and try to figure out why?
In this case SBD was worth a dollar most places, but it's worth a dollar thirty on Polo.
Next step is to find the path from lowest to highest using a nearest neighbor algorithm.
The way I do this is I have a feed scavenger setup for every exchange I trade on. It's constantly receiving pricing and orderbook data. I then feed that into a graph database.
From here the strengths of a graph DB take over. You can simply ask the DB, what's the optimal path from point A (BTC) to point B (SBD). As soon as I have SBD I'm going to trade it back for BTC, because 30% premium is huge. It's not normally that simple though. Normally there is an optimal round trip you need to calculate.
It looks like A - B - C - D - A in fewest steps, but highest spread. Again graph DBs are incredibly helpful here.
I only have about $10k I trade with, whenever my money hits more than a 30% increase I do a draw down to something safer than crypto.
I make the bulk of my money building custom trading bots for people, so finding ways to be creative about trading is just something I enjoy doing. Secret sauce for modern arbitrage engines is a good solid graphdb though.
Hello, I am called Irina. You could will share source codes of a boat!? =) I Uda very much, very grateful ;)
Здравствуйте, меня зовут Ирина. Могли бы вы поделится исходниками бота !? =) Я буду очень, очень благодарной ;)
Wow amazing. I didnt understand a lot of what you replied. Never been really good in programming and stuff. I bet other people learned a few things from your reply though.
Thanks for the answer! Ill keep trading forex I think. Easier for me. I wish I could understand what you are talking about...
Lots of good opportunities for arbitrage recently with STEEM, and yes its a legit way of making money!
Good post.
Thanks! If I ever seen one of my posts gain traction and interest, I'll start going a bit more into depth about strategies. Right now though it looks like the front page gods are interested in clickbait :D