Binance arbitrage opportunities arise due to price differences between trading pairs, spot and futures markets, or even across different exchanges. Traders don't just rush into trade without calculating the see if the opportunity is profitable or otherwise.
Here’s a simple guide on how to calculate arbitrage in order to be certain of the trade signal
Here an example calculation
Practical Example of Binance Arbitrage Calculation
Given Data:
Buy Price on Binance (Spot Market): $50,00
Sell Price on Another Exchange: $50,500
Quantity: 1 $BTC BTC
Trading Fee (0.1% per trade on Binance): 0.1% = 0.001
Withdrawal Fee: $10
Step 1: Calculate the Arbitrage Percentage
Arbitrage % = ((Sell Price - Buy Price) / Buy Price) × 100
Arbitrage % = ((50,500 - 50,000) / 50,000) × 100
Arbitrage % = (500 / 50,000) × 100
Arbitrage % = 1%
Step 2: Calculate Total Fees
Binance Trading Fee for Buying = Buy Price × 0.001
50,000 × 0.001 = 50
Binance Trading Fee for Selling = Sell Price × 0.001
50,500 × 0.001 = 50.5
Total Trading Fees = 50 + 50.5 = 100.5
Withdrawal Fee = 10
Total Fees = 100.5 + 10 = 110.5
Step 3: Calculate Net Arbitrage Profit
Profit = (Sell Price - Buy Price) × Quantity - Total Fees
Profit = (50,500 - 50,000) × 1 - 110.5
Profit = 500 - 110.5
Profit = 389.5
Final Profit: $389.5
This means after fees, your net profit from this arbitrage trade is $389.5 per BTC. If fees were lower, or the price difference was high, perhaps up 10% the profit would be higher up to $3890 per transaction.