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Here is a step-by-step explanation of triangular arbitrage on Binance, which is almost the only way you can profit from currency conversion instead of incurring losses:
1️⃣ General Idea
Triangular arbitrage relies on exploiting price differences between three currencies simultaneously.
Instead of converting from currency A to B directly, go through a third currency C if the total price on this path is better than the direct price.
Simplified example:
USDT → BTC → ETH → USDT
If the total prices on this path give you more than what you started with, that's an immediate profit.
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2️⃣ Execution Steps
1. Choose 3 currencies related to trading pairs available on Binance (e.g., BTC/USDT, ETH/BTC, ETH/USDT).
2. Monitor live prices on the three pairs at the same moment.
3. Calculate the return:
Convert 1 USDT to BTC
Then BTC to ETH
Then ETH to USDT
If the output > 1 USDT + fees → you have a profit opportunity.
4. Execute the trade immediately as these opportunities last only a few seconds.
3️⃣ Helper Tools
Spot Market on Binance (not Binance Convert) to see the real prices.
Price tracking programs or arbitrage bots to speed up execution.
Examples of open-source free bots:
On GitHub search for: Binance Triangular Arbitrage Bot.
---#CPIWatch
4️⃣ Important Notes
Binance fees for spot: 0.1% (or 0.075% with BNB).
Speed must be very high as prices change every second.
Large capital provides relatively higher profits, but risk remains if the market moves suddenly.
