3. Arbitrage Trading

Arbitrage was defined by the French merchant Mathieu de la Porte. In his treatise “La science des négociants et teneurs de livres” it was used as a consideration of different exchange rates to recognize the most profitable places of issuance and settlement for a bill of exchange. From an academic point of view an arbitrage is a transaction that involves no negative cash flow at any probability.

Nowadays arbitrage is a trading strategy in economics and financial markets that enables traders and institutions to take advantage of price differences between different markets. These differences occur due to inefficiencies of the markets, which lead to price spreads of currencies. Consequently, these spreads can be exploited for profit generation.

As the crypto market is still very young and immature, it offers plenty of possibilities to profit from price differences in a very short time. Based on our backlog tests, the average profit which can be gained is around 0.85%, depending on the liquidity of the trader. However, in order to achieve stable and positive results it requires following implementations:

• High liquidity on several exchanges (the more exchanges covered, the better)

• Specialized software with certain algorithms is needed to monitor the markets in order to spot the most profitable trades with a certain amount of money

• Specific global infrastructure is needed to perform the trades in the appropriate time (server locations, minimization of latency, etc.)

The market follows a certain trend: numbers of crypto-exchanges and -assets are growing faster than new funds flow into the market. Consequently, there is the same liquidity for a larger market, which leads to an increase of arbitrage opportunities. Therefore, arbitrage offers an excellent way to profit in a volatile crypto-market with very low risk, while contributing to making the market itself less volatile by increasing its efficiency at the same time.

On April 11th, 2018 at 12:40 GMT, the price of 1 Bitcoin was $6,855.00 on Bitfinex and $6,962.97 on Exmo. That is a price spread of 1.57%. A trader who was holding Bitcoins and US Dollars on both of these exchanges at this time could have immediately realized profits by selling his Bitcoins on Exmo and buying Bitcoins on Bitfinex

The profit will be distributed between the investor, the affiliate and the platform itself. As each party is contributing value to the Future Gold Arbitrage community the allocation of the profits is as followed: 80% to the Future Gold -Coin Holder, up to 18% to the Affiliates and at least 2% to Future Gold Arbitrage. More information about the affiliate program is available on the website Future Gold Arbitrage.