Traders often use the difference in quotes on Cryptocurrency Exchanges in their own interests. This way of earning money is called arbitrage, and that means buying a digital currency at a low price on one exchange and then selling it at a higher price on another.
The most accessible type of arbitrage is so-called Intermarket arbitrage. Intermarket arbitrage implies spotting the price difference of one instrument on different markets. After that, we should simultaneously open a long trade on one market and short it on the other. As soon as this difference becomes zero, you close both positions.
In fact, inter-exchange cryptocurrency arbitrage is a comparison of the value of crypto assets on different exchanges. To make successful deals, you need to start tracking rates on different exchanges, as well as learn to predict their dynamics.
As you know currently Pylon Eco Token is traded on one centralized Exchange – XT.COM – https://www.xt.com/tradePro/petn_usdt and on two decentralized Exchanges as well PancakeSwap and ApeSwap.
Below, we would like to show what opportunities are in arbitrage when it concerns the Pylon Eco Token (PETN) trading.
Picture 1 – Price of Pylon Eco Token (PETN) on PancakeSwap Decentralized Exchange
In picture 1 we can see the rate of PETN/USDT trading pair on decentralized Exchange PancakeSwap. As we see the price is 0.690.
Picture 2 – Price of Pylon Eco Token (PETN) on XT.COM
In Picture 2, we could monitor the rate of PETN/USDT crypto pair on centralized Exchange XT.COM and we see that price is significantly different from what we observe on PancakeSwap.
So, we have an opportunity to execute a risk-free Intermarket arbitrage deal on the PETN/USDT crypto pair. It should be stated that arbitrage deals have several advantages:
- Arbitrage transactions are a specific type of trading, where a trader tries to make a profit without market risks. The Inexistence of a risk factor in this type of trade is derived from the nature of arbitrage itself. The key idea of arbitrage is the ineffective pricing of an instrument or group of instruments, which means that the market misjudges the value of an asset, and as the result, it creates an arbitrage opportunity.
- In arbitrage deals, the trader does not need to assume if there is a possible difference in prices, due to which it will be possible to earn. Price difference already exists, so a trader just needs to execute a trade.
- Another irrefutable advantage of arbitrage trade is the relatively high profitability. On average, arbitrage can generate a return of over 20% per annum.
- An additional tangible benefit of arbitrage trade is that there is no need for deep technical analysis. This is due to the fact that the time factor is removed from the formula – there is no need to predict whether the asset will rise in price or decrease in the near future because the profit is obtained not from the time difference, but from the difference in the markets where the asset is purchased and sold.
- We can enter into arbitrage deals during the different market phases, whether we have an uptrend, downtrend, or sideways market and this is already a factor of stability.
Some people may ask a question: where does the difference in exchange rates come from? The answer is simple – a significant difference in rates between exchanges occurs when trading activity is high, for example, when crypto-asset greatly increases or fall in price, or if large players (whales) sell crypto assets for a large amount on some exchange, affecting the rate. Such cases on the crypto market are not uncommon, but please keep in mind that “arbitrage windows” open only for a limited time, which can last only a few hours.
As our readers know, we inform you about the arbitrage opportunities on PETN regularly. The management council and its executive team will do their best to generate profits for both our token holders and project supporters.