(30th-December-2019)
As the example above to cover deposit and withdrawal fees (see next section). The best practice is to run a bot that identifies the opportunity and if it is higher than a certain threshold (that includes fees and taxes), buy and sell while you are sleeping.
It can be even more complex, you could have bought first number of Litecoins (LTC), then ETH for LTC, BTC for ETH and finally cash out BTC for USDT. In this case you would make 0.306% profit (on 20th of August 2018, 04:26 CET).
Given the fact that the number of cryptocurrencies is approaching 2000, the combinations are endless, see example on Figure 1.
Fees
By now, hopefully, you have identified an arbitrage opportunity and know how much percent you will gain if the orders will be executed in the ideal/theoretical case. Now let’s have a look how much fees you have to pay and what risks are associated with every trage.
Fees at exchanges:
There are three major sources of fees at the exchanges:
Fee #1: Fiat deposit/withdrawal fee is taken by an exchange for deposit/withdrawal of money from your bank account or by a credit card payment.
Credit card payment is instant, you immediately can use your funds. However, the fee ranges between 3% to 8%. WEX exchange charges 15% for the fiat withdrawal.
The wire transfer to the exchange deposit account has usually a small transaction fee (see below), but it can take several days.
Direct deposit (might be even slower than the wire transfer, moreover direct deposits outside of country incur the conversion fee, e.g. in US it is 2.5%)
Fee #2: Transaction fee
Depending on the exchange, the transactions are charged with
Fixed fee
Maker fee
Taker fee
The fixed fee is obvious: independent of the coin, volume and order books, the fee stays always the same. It ranges between 0.02% and 0.1%.
The maker and taker fee have been introduced by the Kraken exchange and some other exchanges followed.
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