Lesson 5 - Balance Distribution part 2

What is the situation on the exchanges needed to be able to arbitrage?

To perform arbitrage, we need to find an exchange that lags behind the price on another exchange.

From previous lessons, you should have already understood that we have a leading exchange and a lagging one. On the leading exchange, the price changes faster. Finding two such exchanges will be your main goal when searching for a pair.

One simple method is to evaluate the trading volume. Look at the trading volume; if one exchange has 70% of the trading volume for a coin and another has 5%, the first will very likely be the leading one, and the second the lagging one.

Here is an example with Bitcoin. On Binance, the volume in the pair with USDT and BUSD is 35% of the total Bitcoin trading volume (according to CoinMarketCap), while on Kraken and KuCoin, it is only 0.55% and 0.63%. It is very likely that you can arbitrage with them.