How Much Shall I Allocate Coins To Start Arbitrage?

If you are altcoin and BTC HODL investor. You can utilize the arbitrage strategy to increase your profit in the same time of gaining market beta exposure. What if I am beginner? How shall I start?

If I am a beginner in this crypto trading and would like to start with arbitrage. This is my scenario:

  1. I have less capital. I have only 0.50 BTC in total.
  2. I understand the spreads of LTCBTC pair in Exchange A and B is consistently exists
  3. I am bullish of LTC and think it will appreciate x number of times in the next 1 or 2 years.
  4. I would prefer to focus my capital in one single coinin this scenario.
  5. I will buy 0.25 BTC worth of LTC. i.e. 0.011. I will get 22 LTC.
  6. I will then place allocate 22 LTC and 0.25 BTC into Exchange A and B to start the arbitrage strategies.
  7. Whenever the 1.00% spreads exists(this is my preference) I will start to sell 1 LTC @ Exchange A and buy back at Exchange B each time.
  8. Each time I will capture 0.00011 BTC as profit in single
  9. Since I have 22 LTC, i may be able to perform 22 times to capture 0.00242 BTC with my capital until my LTC is used up in either Exchange A or B.
  10. I will then transfer LTC and BTC back to the position for arbitrage to start again. At this point, I expect my LTC position maintained at 22 but my BTC increased with the profit of 0.00242 BTC.
  11. By doing this few times a day, I can capture relatively decent profit in single day.

Since arbitrage activities involves coins transfer and BTC as funding vehicle. I would rather to stay focus in single pair rather than doing few pairs at the same time.

Note: This is my own preference scenario. I am not financial adviser that advise you to do so. I am sharing my experience gained after this few years of arbitrage strategies in crypto currency.

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