How Spot Arbitrage Tools Work: Mechanics and Examples Overview

03/06/2025

How Cross-Exchange Spot Arbitrage Works

Cross-exchange spot arbitrage is based on price differences of the same asset on different exchanges. Special analytical tools automate the search for such opportunities by collecting quotes, accounting for fees, and estimating potential profit.

Spread List

With the /search command, the tool displays an up-to-date list of opportunities, sorted by net profit. Each line shows the main information: the first number is net profit, then in parentheses the net spread value in percentage; after that comes the purchase exchange, then through an arrow — the sale exchange, and finally the token name.

Example of spread list:

Spread Information

The "Recalculate by Volume" button allows you to recalculate the spread taking into account the desired deposit volume that you specify.

Tool Settings

Analytical platforms for arbitrage offer many flexible settings that allow adapting the tool to each user's strategy.

There are no universal settings, as each user's arbitrage strategy is their own and depends on individual goals. Below are several key parameters worth familiarizing yourself with when choosing and configuring such a service.

Exchanges

Modern solutions work with many exchanges — dozens of platforms. In settings, you can disable and enable each one separately, for both deposit and withdrawal. It's recommended to register on platforms of interest in advance:

Maximum Volume

This setting works in a non-obvious way. It's recommended to specify your deposit amount. In this case, the service will automatically calculate spreads for your deposit volume if the possible volume for executing the opportunity is larger. If needed, you can recalculate manually — there's a "Recalculate by Volume" button under the detailed opportunity information.

Maximum Withdrawal Fee

The transfer fee can be a significant portion of your deposit. And if it happens that the price moves against you during the transfer of cryptocurrency tokens, this very fee can "bite off" a sensitive chunk of your deposit. For example, you have a $500 deposit, and the transfer fee is $15 — that's 3% of your deposit. The "Maximum Withdrawal Fee" setting allows you to filter out opportunities where withdrawal costs are unreasonably high and focus on safer options.

Monitoring

This setting enables automatic sending of new opportunities as soon as the tool detects them.

Typical Advantages of Arbitrage Scanners

Quality arbitrage solutions typically provide comprehensive information on opportunities, account for all fees, and allow flexible parameter configuration for your strategy.

Service Quality

Good tools analyze prices, order book volumes, deposit size, transfer and hedging possibility, and warn about potential pitfalls for individual tokens. Profit is calculated taking into account fees for buying, selling and transferring.

Development Direction

Advanced services are not limited to one direction. In addition to spot cross-exchange arbitrage, there are solutions for arbitrage between futures and spot, as well as between centralized (CEX) and decentralized (DEX) exchanges.

Different services may have different access models — from subscription to lifetime license.

Tips for Working with the Tool

These tips are relevant for everyone working with cryptocurrency arbitrage, regardless of the chosen tool.

Check Token Contracts

Less than half of exchanges provide token smart contract information. Therefore, many tools compare tokens by symbols rather than contract addresses. In rare cases, this can lead to opportunities with tokens that have the same name but are different assets. Such opportunities usually show a constant large spread. It's important to independently verify contract addresses — exchanges place this on deposit/withdrawal pages. A life hack: if time is short, compare token charts — matching historical movements likely indicate the same asset.

Additional Fees

On the withdrawal page, check for additional fees. Not all exchanges disclose this. Where possible, services account for additional fees and indicate them in the opportunity (in parentheses, in percentage). It's worth verifying this on the token withdrawal page. Such fees are typically charged as a percentage of the withdrawal amount.

Transfer Speed and Network Confirmations

Exchanges require a certain number of network confirmations before crediting funds. You can find out about them on the token deposit page. One confirmation is the creation of one block in the blockchain. For example, in the Ethereum network, a new block is formed approximately every 12 seconds. If an exchange requires 32 confirmations, the time calculation will be as follows: 32 × 12 = 384 seconds or 6.4 minutes. The average block creation time can be checked in a blockchain explorer. Just open the block history section and see how often they are formed. Over time, with experience, you will be able to quickly determine the approximate token transfer time by simply looking at the required number of network confirmations.

As an example of the described approach, consider crypto arbitrage scanner Arbitrage Radar.

This material is for informational purposes and is intended to help understand the principles of cross-exchange arbitrage and the operation of analytical tools.