Simple Arbitrage — Complete Guide

1. What Simple Arbitrage actually is

Simple Arbitrage (also called pure arbitrage) is the most direct form of crypto arbitrage: the same asset is bought on one exchange and sold on another at the same instant, capturing the price difference. Both legs are executed as taker orders — you take whatever liquidity already sits in the order book, rather than waiting for your own order to be filled. That's what makes execution certain and near-instantaneous, and it's why this is the lowest-risk strategy of the three ArbiMaster implements.

There is no directional bet involved: you're not predicting whether BTC goes up or down. You're exploiting the fact that the crypto market is fragmented across dozens of independent order books, each with its own liquidity and participants, so the "true" price of an asset is never perfectly identical everywhere at every millisecond.

2. Why the price gap exists in the first place

Cross-exchange price gaps are a structural side-effect of fragmentation, not a bug. The main drivers are:

Uneven liquidity — a large market order on a thinner exchange moves its own book more than the same order would on a deep one.
Regional demand — local buying/selling pressure (e.g. a region waking up, a local news event) hits one exchange before arbitrageurs elsewhere react.
Latency between venues — even automated market makers need time to re-quote after a large trade; during that window the two books disagree.
Isolated large trades — a whale order can temporarily "walk" one order book away from the consensus price.

These gaps are usually tiny (a few basis points) and close within seconds — which is exactly why the strategy must be automated and pre-funded rather than executed manually.

The transfer trap

A beginner's instinct is: "buy cheap on A, withdraw, deposit on B, sell high." This does not work. On-chain confirmation for BTC/ETH can take 5–20+ minutes, and by the time the funds land the spread has already closed — or reversed. Simple Arbitrage only works with capital pre-positioned on both exchanges, so both legs fire in the same instant with zero transfer time in the critical path.

3. The math

Core formula

Net Profit = (Sell Price − Buy Price) × Volume − (Taker Fee A + Taker Fee B) × Volume × Price

Simplified as a percentage: Net Spread % = Gross Spread % − Taker Fee A % − Taker Fee B %

Because both legs are taker orders and fill instantly, there's no maker-fill uncertainty to model — the only real unknowns are fees and the volume actually available at the quoted price.

Tradeable volume is always the smaller of what's available on each side of the trade: the ask quantity on the buy exchange, and the bid quantity on the sell exchange. A 2% spread on a book with only $200 of depth is not a $2,000 opportunity — it's a $4 one. ArbiMaster's analyzer always takes min(askQty, bidQty) before reporting an opportunity.

Worked example

Exchange A: BTC/USDT Ask = $40,000, available qty = 0.6 BTC, taker fee 0.10%
Exchange B: BTC/USDT Bid = $40,800, available qty = 0.9 BTC, taker fee 0.10%

Gross spread: 2.00% ($800)
Tradeable volume: min(0.6, 0.9) = 0.6 BTC
Total fees: 0.20% ≈ $80 per BTC
Net profit: ≈ 1.80% → ≈ $432 on the 0.6 BTC actually tradeable.

4. Step-by-step execution flow

1Pre-fund both exchanges. Keep both the base asset and the quote currency (e.g. BTC and USDT) available on each venue — you need to be able to sell on one side and buy on the other without waiting for a deposit.

2Monitor continuously. ArbiMaster streams best bid/ask across all 10 monitored exchanges in real time via WebSocket and evaluates every pair against your configured minimum spread (default ≥ 0.3%, net of estimated fees).

3Check depth, not just spread. A wide spread with thin liquidity is a trap — always look at the tradeable volume ArbiMaster reports, not just the percentage.

4Execute both legs together. Buy on the cheaper exchange and sell on the pricier one as close to simultaneously as your setup allows — every millisecond of delay is market exposure you didn't sign up for.

5Rebalance periodically. Repeated one-directional trades drain one asset from one exchange (see below). Check your balances regularly rather than after you've already missed several opportunities.

5. The inventory imbalance problem

If most opportunities happen to point the same direction for a while (buy on A, sell on B), exchange A slowly loses its quote currency and gains the base asset, while B does the opposite. Eventually one side runs out of what it needs to execute the next trade. This is inventory imbalance, and it's the main operational friction of the strategy — not a design flaw, just something to actively manage.

Rebalance with stablecoins on fast, cheap networks (e.g. TRON or Solana for USDT/USDC) rather than with the base asset itself — transfers are quicker, cheaper, and don't expose you to price movement while in transit.

6. Setting it up on ArbiMaster

From Settings you can:

Build a coin watchlist (up to 20 symbols) so the scanner focuses on what you actually trade.
Set your minimum spread threshold — the default 0.3% already accounts for typical taker/taker fees, but tighten it if your fee tier is lower.
Link your Telegram account to get a personal alert the instant an opportunity above your threshold appears, with per-strategy cooldown so you're not flooded with duplicate notifications for the same fading spread.

Open the Simple Arbitrage scanner to see live opportunities across all 10 exchanges.

7. Risks to keep in mind

Execution lag: even "simultaneous" orders have a few hundred milliseconds between API calls — enough for fast-moving markets to erase part of the spread.

Slippage: the price you see is not always the price you get once your order eats through the top of the book.

Withdrawal/network fees during rebalancing: these aren't part of the trade itself, but they eat into your overall margin over time.

Exchange outages: API downtime or wallet maintenance on one side can leave you unable to complete the second leg.

8. Best practices

Know your real fee tier. Volume-based fee discounts change your effective break-even spread — recalculate your minimum threshold if you move tiers.

Automate detection, not just alerting. Manual monitoring simply cannot compete with sub-second opportunities; use ArbiMaster to watch continuously and act on alerts fast.

Size positions to depth, not to your available capital. Trading beyond the reported tradeable volume causes slippage that eats the whole edge.

Track your inventory daily so rebalancing is a scheduled routine, not an emergency reaction to a stalled strategy.

FAQ

Is Simple Arbitrage really risk-free?

No strategy is fully risk-free. It's the lowest-risk of the three because both legs execute instantly against existing liquidity, but execution lag, slippage and exchange outages remain real risks.

Why does ArbiMaster recommend a minimum spread of 0.3%?

Because typical taker/taker fees on most exchanges already total around 0.15–0.20%. A 0.3% gross spread leaves a realistic margin after fees and minor slippage — anything tighter is often unprofitable in practice.