You need to first look at the coins in your portfolio. Then you need to check their prices on a different exchange. You’ll notice a slightly different price on each exchange, either higher or lower. There are various reasons for this, including fees, trading volume, and liquidity.
Furthermore, exchanges with low fees and higher trading volume and liquidity, for example, will generally have lower prices.
This price difference is where arbitrage comes into play.
For instance, if you’re a savvy trader, you could profit by buying the coin low on Exchange A and then selling high on Exchange B. In addition, outside of crypto, this practice isn’t new and has been used for decades in traditional markets like stocks and bonds. For example, a stock’s price on the New York Stock Exchange may differ from the Tokyo Stock Exchange.
Arbitrage sounds simple on the surface—buy low, sell high. However, you’ll need to consider things like platform trading fees and hidden costs, both of which can quickly turn your potential gains into losses. If you’re looking to get started, consider using Binance P2P, the official peer-to-peer marketplace of Binance. It’s the go-to platform for many reasons. Each transaction comes with zero fees.
Moreover, there’s support for more than 300 payment methods and 70 local currencies. And users can enjoy safe, flexible trading with a vast roster of verified crypto merchants. Keep reading to discover how arbitrage traders use Binance P2P.
3 Ways Traders Arbitrage On Binance P2P
Traditional exchanges may have plenty of arbitrage opportunities readily available. However, peer-to-peer (P2P) marketplaces provide a flexible trading experience you won’t be able to find elsewhere. For example, on just a single marketplace like Binance P2P, you’ll find price differences in crypto, local fiat currencies, and global payment methods.
Below, we’ve listed three popular arbitrage techniques used on Binance P2P.
1. Do it all on Binance P2P
This technique is simple but does require some perceptive eyes. If you look through Binance P2P, you’ll find that crypto prices may differ depending on the offer’s payment method or local currency. Now, all you need to do is find the profitable price spread. Buy from a user selling low, then sell to a different user buying high.
2. Use the Binance Exchange
You’ll be able to leverage two different markets within the Binance ecosystem for this technique. You can start by checking prices on our traditional exchange feature, also called the Spot market.
3. Trade across Different Platforms
Venture outside of the Binance ecosystem and search for spreads between different P2P platforms or traditional crypto exchanges. Find a lower price on one platform, then sell higher on a different platform.