How to choose exchanges for arbitrage
Arbitrage always runs between at least two venues, and the choice of exchanges decides almost everything: what you pay in fees, how fast you move coins, which coins you can trade at all and how safely your money sits. Here are the criteria worth choosing by and how to assemble a working set of exchanges.
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Why the choice of exchanges matters so much
A spread appears between two exchanges, but you can only capture it if both have liquidity, withdrawals of the coin are open and fees do not eat the gap. Large exchanges bring depth and reliability, smaller ones more price divergence but more risk. A working set usually combines both.
Selection criteria
| Criterion | Why it matters | How to check |
|---|---|---|
| Trading fees | Every route takes at least two trades, on futures four | The exchange fee schedule, discounts for its token and volume |
| Liquidity | A deep book means less slippage | Daily volume and book depth on the coins you need |
| Coin selection | More coins, more routes | The list of spot pairs and futures |
| Withdrawal networks and fees | They set the cost and speed of transfers | Each coin's withdrawal page |
| Withdrawal and deposit status | A closed withdrawal kills the route | The exchange's wallet status page |
| Futures and funding | Needed for futures and funding arbitrage | Perpetuals available, funding period |
| Verification and limits | Without KYC withdrawals may be limited | Requirements and limits for your country |
| Reliability | Your money sits on the exchange | Track record, outages, proof of reserves |
Large and smaller exchanges
| Large (Binance, Bybit, OKX, Bitget) | Mid-size and smaller (MEXC, Gate, HTX, KuCoin, BingX and others) | |
|---|---|---|
| Liquidity | High, deep books | Lower, especially on altcoins |
| Spreads | Small, closed quickly | More frequent and wider, the price lags |
| Number of coins | Large, but stricter listing | Very large, many new tokens |
| Reliability | Usually higher | Varies, caution needed |
| Role in arbitrage | The anchor exchange, hedging | A source of price divergence |
A generalisation. Conditions change, so check current fees, limits and availability in your country before trading.
How many exchanges you need
At least two, but two give few routes. Most work with 3-5 main exchanges: one or two large ones as an anchor and several mid-size ones where divergences appear more often. More exchanges mean more routes, but also more balances to keep and withdrawal statuses to watch.
Preparing a working set
Complete verification in advance
So you do not hit withdrawal limits mid-trade.
Secure the accounts
Two-factor authentication, a withdrawal address whitelist, an anti-phishing code.
Check fees and lower them
Paying fees in the exchange token and volume tiers noticeably change the result.
Spread the capital
Keep USDT and the main coins on several exchanges to trade without waiting for transfers.
Check the networks between exchanges
For each pair of exchanges know in advance which network moves USDT cheaper and faster. See the article on choosing a network.
Example: the effect of fees
| Gross spread | +$5.00 |
| Fee 0.2% × 2 trades | −$4.00 |
| Result at 0.2% | ≈ +$1.00 |
| Fee 0.08% × 2 trades | −$1.60 |
| Result at 0.08% | ≈ +$3.40 |
Excluding the transfer and slippage. The fee gap between tiers at the same exchange can change a route's income several times over.
The scanner follows 30 venues: 16 futures and 14 spot. Exchanges you do not use can be switched off so you only see routes where you have an account and money.
Glossary
- Taker / maker - who takes a resting order and who posts one. Takers pay more.
- KYC - identity verification at an exchange.
- Address whitelist - the list of addresses withdrawals are allowed to.
- Tier (VIP level) - a fee level that depends on trading volume.
- Anchor exchange - a large exchange holding the main capital and the hedge.
Choosing exchanges FAQ
Which exchanges are best for arbitrage?
Usually a mix of large exchanges with deep liquidity and mid-size ones where price divergences are more frequent. The exact set depends on your country, available coins and fees.
How many exchanges do I need for arbitrage?
At least two; in practice 3-5 main ones. More exchanges give more routes, but balances and statuses get harder to control.
Why are spreads more frequent on smaller exchanges?
They have less liquidity and fewer participants, so prices catch up with large exchanges late. The risks - closed withdrawals, thin books - are higher there too.
Do I need verification everywhere?
For full withdrawals almost everywhere does. Complete it in advance, not in the middle of a trade.
How can I lower fees?
Pay fees in the exchange token where that gives a discount, grow volume to reach the next tier, and use limit orders where appropriate.
Can I choose exchanges in the scanner?
Yes, in VVARB exchanges can be switched on and off, and routes are shown only between the venues you select.
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