Advanced Strategies and Review · Crypto Trading Guide

An apparent price loop can disappear after fees or before the final trade. Calculate the executable route, not a chain of midpoint prices.

Define the route and direction

A triangular route starts in one asset, converts through two others and returns to the starting asset. Use the executable bid or ask appropriate to each leg and the available size. Multiplying three convenient midpoint quotations does not represent a trade that can necessarily be executed.

Calculate a hypothetical loop

Start with $1,000. Assume the executable route buys 10 A at $100 each, converts each A into 2 B and sells each B for $50.50. Before fees, the ending value is $1,010. If every leg charges 0.1% from the amount received, the simplified result is $1,010 × 0.999 cubed, or about $1,006.97. A required $8 transfer would turn that into about $998.97, a loss of $1.03.

Test execution rather than screenshots

The calculation assumes all quotes remain available for the required quantity. If a leg fills partially or price moves, the remaining exposure can be directional. Across venues, deposits, withdrawals, minimums and transfer times add risk. Prefunding several accounts avoids some transfer delay during execution but commits more capital and increases counterparty exposure.

Measure residual risk

Record timestamps, order sizes, fee currencies and the recovery route if one leg fails. Include network charges and taxes when relevant to the analysis. A single atomic transaction can change failure behaviour within one network, but it still has contract, ordering and gas risks. A four currency route uses the same principles with another leg and another source of cost. More routes do not create an edge unless the measured opportunity survives realistic execution.

Try it yourself

A route has a gross multiplier of 1.002 and charges 0.1% on each of three legs. Is it profitable before fixed costs?

Show the worked answer

No. 1.002 × 0.999 cubed is approximately 0.998997, a loss of about 0.1003% before fixed costs.

Further reading

Educational material. Examples and rates are hypothetical, not trade recommendations. Product terms, eligibility and risks vary by venue and jurisdiction.

Continue learning