From 0.01 to 510,000 Bitcoins in 365 Days – End of Week 3 – Arbitrage Win

TL;DR;

Making one trade per day, I’m trying to grow 0.01 worth of BTC by 5% per day for 365 days.

Today is the end of week three. (View last weeks blog)

I am up 9.8% from my starting amount of 0.009897, sitting at ~0.0108677

I am up 13.9% from last week.

Track progress here.

Oh hai there

Until this morning, I was going to name this blog “Failbitrage”.

Last week, I vaguely remember feeling pretty positive. I was up 7% and had received this great comment on /r/CryptoCurrency in my End of Week 1 post (around the same time I posted posted the End of Week 2 post):

“Don’t let anyone get into your head saying this is impossible. Aim higher than the rest and leave them behind. Break up your massive goal into pieces that you can chew. You have a method that in theory is not impossible.” – usdxrbeur

I had the “You’re the best around” tune from Karate Kid playing in my head and thought this was going to be a record week.

With a clearer head I had a new idea about how to make gains for week 3.

New methodology: more risk (not financial advice)

My last week’s plan was to simply keep on picking tokens out of hat. But later on in the night I thought that I was being too conservative in the my token selections. I was determined not only to make the 5% per day – but to get some bigger wins and catch-up to my daily target.

I started looking at tokens that have taken a major dive and thought about taking two outs:

1. Either make 5%+ on the rebound, or
2. Look for arbitrage opportunities on other exchanges

Let the picking out of the hat begin

My girlfriend’s first pick out of the hat was Ambrosus. Fabulous pick. The only problem, I was too impatient. I put in my buy order in and waited. And waited. And waited. (It was a low volume exchange). To quote Homer; “The waiting game sucks”.

So I got my girlfriend to pick a new token out of the hat. Monetha.

What happened? Firstly, if I stayed with Ambrosus – my buy order would have been filled and I would have got the 5% rebound. Monetha on the other hand started to tank further.

Arbitrage time

For those of you not familiar with arbitrage, at any given time, tokens have different values on different exchanges. For the most part, the delta (or the difference in value) between exchanges is fairly small (<1%). But sometimes, there are blips in the matrix and healthy gains present themselves to you.

It’s a bit like when you buy an old SEGA Mega Drive (Genesis) game at a garage sales for $1 and then sell it on eBay for $5.

When transfering the Monetha between exchanges, I was faced with a dilemma: Losing 1.5% of my value in fees, while having no guarantee that the arbitrage would work. I decided to risk it for a biscuit and moved forward.

Long story short, I was lucky enough to break even. I sold a small portion at a loss and made gains on the rest. I thought I was pretty clever, but I would have made that and more if I had stayed on the old exchange (though it did take 3 days for that to happen).

Arbitrage time 2.0

The new exchange I was on didn’t do much volume and the hottest ticket in town was Dogecoin.

After getting back into BTC, I looked for new arbitrage opportunities (and ways to get off that exchange in general). So I picked up some NLC2 and headed over to Cryptopia at minimal cost.

I had a clear memory of putting a sell order at 5% above my buying price, but it turns out I didn’t – and had missed the win boat once again. So I sold at a tidy 2.3% profit – while the rest of the market was off to the races.

Arbitrage 3.0

Before I started writing this blog on Saturday, I noticed a blip in the matrix, OMG went through the roof on Cryptopia. Seeing it was a recent move and expecting a sudden correction, I did nothing about it. When I finished writing this blog (a couple of hours later) I noticed the price was still holding and that there was a massive buy wall supporting it.

I quickly sold out of the ETH I bought randomly, bought some LTC, lost 3% transfering to Bittrex and the confirmations couldn’t come fast enough.

As I was waiting for the confirmations on Bittrex, I thought I’d create a new address for OMG on Cryptopia.

FFS!

My repeated attempts failed. I tried a different browser, failed. So I decided to cancel some shizzlecoin sell orders that had been sitting there for months (hoping for a moonshot), and bought some overpriced OMG in an attempt to generate an address. Fail. Fail, fail, fail!

I had the impression that the folks at Cryptopia had put a freeze on new wallet creations to capitalise on this scenario.

By this time, I had bought some BTC and exchanged it to OMG and then waited for my opportunity.

With no success on “Craptopia”, I decided to look for new, greener, OMG arbitrage pastures. I first tried Gate.io, but luckily for me, the confirmation email took too long. I ended up going with Bit-Z, which had a healthier spread than Gate.io (they have a nice mobile app also).

Withdrawing from Bittrex to Bit-Z ended up costing me another ~5%! So my gamble on Bit-Z, really needed to pay-off.

The desktop version of the exchange wasn’t showing up, so I placed the order on the app and went to bed at around 5am.

Result: No enough sleep and desire to slap some Kiwis on the back of the head. And all my OMG selling at 0.00189999. The Gods of arbitrage smiled upon me, the losses I took in transferring between 2 exchanges and buying/selling 4 cryptos all recovered – and more some.

What’s the lesson in all of this?

For one, arbitrage seems easier than it really is.

Secondly, if you’re going to do it, you need to know what’s cheap to transfer and what’s not. Was LTC a good move between Cryptopia and Bittrex? I don’t know… I definitely didn’t lose that much transfering NLC2. However, NLC2 is only available on limited exchanges.

Lastly, you need some luck.

Why I didn’t trade everyday?

Life got in the way.

Last week’s feedback from /r/cryptocurrency

Not too many comments last week. But “Just buy a hat. Massive gains!” wins comment of week. lol…

What’s the plan for week 4?

Pretty tempted to find some low volume coins with a healthy gap between bid and ask – and just trade both sides. But that requires time and patience (of which I have neither). So we’ll see… I feel like my bag of primitive trading tricks is slowly increasing.

Until next time, I wish you all nothing but green days.

Feedback

Feel free to provide your feedback on Reddit or send me your buy recommendations for the day @DennisGraham7