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How I made 825% Profit in 15 Minutes with Cryptorush Arbitrage

Cryptorush is a special exchange. Its price matching engine only does exact matchings. This leads to a lot of confused traders and some arbitrage opportunities for people with a little budget like me. Here is how I made 800% profit in 15 minutes.

It was during the beginning of the AUR pump. While I was considering whether to was a real pump or not, I saw a weird sell order. Immediately I clicked and bought AUR at 0.01 BTC. I tried to immediately sell them at market price, but it took a few minutes due to Cryptorush being slow. 15 minutes later my AURs were sold at 0.089. Roughly 825% return of investment.

I feel somewhat sorry for the guy who apparently mistyped his order. If you order a sell at 0.01 on Cryptsy, it will match the best buy order for you and maybe sell at 0.089 instead. If you order a sell at 0.01 on Cryptorush, it will only sell if there is a matching buy order at 0.01. Cryptorush will not find better orders for you, so be careful.

This method is actually repeatable. While big profits are rare, you can find various of smaller opportunities like this throughout the day. It works like this:

1. Go to the trading overview page and order by 24h volume.
2. Check the markets with the most action. The more action, the more arbitrage opportunities happen.
3. Click the refresh button until you find opportunities.
4. Buy and sell as quickly as you can.

Note that Cryptorush has  relatively little volume. You probably not find a 1BTC profit case. You usually earn something like 0.001BTC. So if you are trading with  budget of more than 1BTC this is not worth your time. If you are cheap and started with scraps like me, it works great to stock up a little. Probably faster than clicking ads and faucets.

It becomes enjoyable, if you are able to automate it. Cryptorush provides an API to poll market data. I have a small script running which pops up a notification whenever an opportunity arises. So I dare you to trade faster than me. 

Litecoin: the little brother

Price at time of writing: $28.35

Market Cap: $503,102,328

Consistent with its name, Litecoin is essentially Bitcoin-lite and is the second most valuable altcoin. It shares nearly all the same features except it has a shorter block rate (every 2.5 minutes versus 10) and a different proof-of-work (scrypt versus SHA2). Shorter block rates mean faster transaction times, which is advantageous, but it’s not a huge change. The use of a separate proof-of-work is. Scrypt was chosen because it theoretically prevents the use of ASICs, those specialized chips that greatly increase mining power and efficiency (though there is debate over the validity of this claim). This is supposed to maintain a sense of egalitarian participation since the arrival of ASIC chips has significantly raised the barriers of entry for mining. If you aren’t already a Bitcoin miner, forget about it. That boat has sailed.

Unlike social networks, Litecoin benefits from its similarities to Bitcoin because of familiarity. All digital currencies have a learning curve, which meant Litecoin’s creators had little explaining to do. They also lucked out with timing. Litecoin popped up right around Bitcoin’s bubble earlier in the year, just as the first ASIC systems started shipping. This made it especially attractive to miners suddenly squeezed out by these powerful entrants. Rather than scrap their now unprofitable mining rigs, all they had to do was download some software to start mining litecoins, which had risen in value from about 50 cents in the fall of 2012 to a few dollars by early 2013. Because why not? They had nothing to lose.

Today, Litecoin maintains its status as a destination for Bitcoin castaways. For those who feel like they missed the boat, with Bitcoin hovering around $900, litecoins are a way to hedge their FOMO at a cost of only $20 each. Of course, you could always just buy a fraction of a bitcoin, but there’s something psychologically satisfying about owning a couple of something rather than 0.05.

All of which keeps Litecoin alive in a Google+ sort of way. It’s Bitcoin, but cheaper and not as popular, with a more accessible mining system. It’s there and people use it, but you aren’t really sure it has a purpose. It’s also not nearly as functional. If only a few vendors accept Bitcoin, nobody accepts Litecoin. That could change, and the shift could be an easy one, especially for those who already accept any digital currency. This makes its future much harder to predict, since it has no real identity of its own. But Litecoin may continue to exist simply because Bitcoin does.

The Basics of Altcoin Trading

The Basics of Altcoin Trading. I feel somewhat preposterous to write about this. This field is so young that nobody really is an expert. There is no standard “How To Trade Altcoins”, yet.

Technically, this is FOREX (foreign exchange) trading, but it is very different. FOREX traders act on a very stable market, where prices change less 1% a day. They heavily use leverage/margin trading for profit. In contrast, the altcoin market is very volatile. Spikes of 1000% happen every week. We do not need margin trading here nor is it even available at the exchanges. Also, altcoin exchanges are very primitive compared to USD/EUR brokers and liquidity is very low.

So what basic knowledge can you acquire for altcoin trading?

Risk Management

You can learn risk management from the FOREX traders. The principles are the same. It basically boils down to

1. Only invest something like 2% of your budget. You might lose it a few times in a row due to bad luck. If you had invested 30% three times and lost it, you have to make 1000% profit with the rest to break even.
2. Invest money you can lose. You want to keep the emotions out, so losing money should not affect you.
3. Keep the losses small. This sounds easy, but is actually hard. Accept a loss before it gets too big. Accepting that you were wrong is emotionally hard.
4. Keep in mind how much you risk vs profit. Do not risk a lot of money for a potential 1% profit. At first you are unable to estimate the risk, so be extra careful until you have some experience.
5. Diversify. Especially once you have a bigger budget. Split your money up and invest in everything with potential. Sometimes you will lose, sometimes you win. If your strategy was right, you will win more than you lose over time.

Tools of Trade

There are some tools and technologies, which are simply necessities. So a serious trader has to learn a few things.

• Learn reading charts. At least those candlesticks. No need to bother with advanced stuff like “resistance bands”. For altcoins this is not applicable. Look into this when you  want to trade BTC/USD or BTC/EUR.
• Learn the differences between the exchanges, so you can make an informed decision which ones you want to use and how much money you want to risk leaving there. For example, Cryptsy has good liquidity, while Cryptorush has lots of smaller coins.
• Learn some technical details like what Kimoto’s Gravity Well means and its implications. What is premining? What does block halving mean?

Reflect

Keep learning. As there are no experts here, every girl mustlearn by herself. So take the time to reflect your last actions. Here are some questions to think about:

• Did I do it right, although I lost money?
• Did I do somethingwrong, although it was profitable?
• What unreasonable things did I do?
• Where my decisions rational or did I rationalize my emotional decisions?
• What skills should I acquire to improve?

Documenting your actions helps tremendously for reflection. Make screenshots.Write down your reasons for each action. Read the old stuff sometimes. What would you do differently today?

Calm Down

Does all that sound like a lot of work? Well, altcoin trading is a way to get rich quickly, but it is not easy. Take it easy. I am here to help you. One of the big contributions of this blog here is to chop information mountains into small blocks and present them in easily digestible bites.