Arbitrage
This strategy monitor prices in two different trading pairs and executes offsetting buy and sell orders in both markets.
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This strategy monitor prices in two different trading pairs and executes offsetting buy and sell orders in both markets.
Last updated
Was this helpful?
The strategy constantly scans for any arbitrage opportunity by comparing the order books on two markets that are trading equivalent assets (e.g. WETH-USDC vs. ETH-USD). Whenever it finds any price dislocation between the two markets (i.e. it's profitable to buy from one and sell to the other), it would calculate the optimal order size to do the arbitrage trade, and trades away the price difference by sending opposing market orders to both markets. You can learn more here:
This guide will show how to setup an arbitrage strategy on IDEX and Binance. Keep in mind that in order to run an arbitrage strategy, you must have funds on both primary and secondary exchanges available for trading.
Start Hummingbot if you haven't already. Here's a guide on how to do this:
To make a new strategy on Hummingbot, we must enter the create command:
Hummingbot will ask you "What is your market making strategy?" and you'll select "arbitrage" as shown here:
Now we'll enter the primary spot connector to Hummingbot. IDEX will be the primary connector in this example.
The secondary connector will be Binance. Once you've selected it, Hummingbot will ask you to enter the token trading pair you would like to trade on IDEX. In this example, we'll use IDEX-USDC on IDEX
And we'll use IDEX-USDT on Binance. Now, enter your abitrage profitability in percentage terms. In this example, we want to have a 0.3% profitability (net of transaction costs).
As we're using an unmatched pair (IDEX-USDC <> IDEX-USDT) we need to use the rate oracle.
Now we can save the strategy by giving it a name.
Finally, we can run the strategy by using the start command.
Hummimgbot will start operating using the parameters you've provided. A more in-depth guide about how to configure the arbitrage strategy can be found here:
Happy Trading!
