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Arbitrage trading explained by Koinexpert
Last updated: Monday, 30 August 2021
The exciting new world of cryptocurrencies offers great opportunities for earning a passive income, and Koinexpert, a company specialising in trading on these markets, can help you achieve this goal.
Koinexpert Arbitrage Services (KAS) was founded by South Africans Ardi Coetzee, Nico Lourens and Nielbert Schmidlin, who’ve been using arbitrage trading – when a currency is bought at a lower rate on one market and sold at a higher one on another – since 2016.
Having made a profit, the owners of Koinexpert wanted to give other people without the expertise the opportunity to do the same, and help you navigate crypto arbitrage.
WHAT IS ARBITRAGE TRADING EXACTLY?
Arbitrage trading is buying and selling the same currency on two different markets at different prices. For example, says Ardi, cryptocurrencies in South Africa are more expensive than overseas, so by buying them abroad and selling locally it’s possible to make a profit. This can be done across various currency pairs when clients utilize Koinexpert’s technology, which facilitates simultaneous buying and selling to reduce overall risk.
WHAT DOES KOINEXPERT DO?
It trades on international and local cryptocurrency markets using the arbitrage principle in order to generate short-term financial gains.
“Arbitrage is a simple concept that can allow just about anyone to make extra cash and we've seen it help countless people,” says Ardi. Years of experience helped Ardi develop rock-solid trading software, and Nico designed the platform, which monitors many exchanges and several trading pairs 24/7.
This means it can identify high arbitrage opportunities and execute trades immediately. “In short, KAS is a system built to automatically execute arbitrage trades. The process includes an Authorised Financial Services Provider, crypto exchanges and trading software,” says Ardi.
Koinexpert's team includes two compliance officers whose job it is to ensure all dealings are transparent and comply with current and future legislation. They also use the services of various well-known legal, forex intermediary and banking partners.
CAN I TRADE MYSELF?
The short answer is yes, but it requires a great deal of experience and expertise – and time – to monitor markets and it’s increasingly difficult to make a profit. “In the past, this was easy to do by yourself because the margins were big (over 5%),” says Ardi. “Nowadays margins are less than that and it has become increasingly riskier to profit from this price difference without software provided by companies like Koinexpert.”
IS ARBITRAGE TRADING RISKY?
All trading carries some risk, however automation has resulted in mitigating some of these risks. For example, Koinexpert’s software has been designed to reduce risk by buying and selling in split seconds when arbitrage opportunities are favourable. Plus it operates 24/7, meaning markets are constantly monitored and opportunities identified.
It’s worth noting that Koinexpert has generated profits of up to 5% for certain traders on certain days and has not made a single loss since it began trading in December 2020. The company is so confident in its ability to execute profitable trades that if a trade is not profitable (or a loss is made), no service fee is charged. You can check out how its trades have performed over the last 90 days.
IS ARBITRAGE TRADING LEGAL?
Yes, South Africans can own and trade cryptocurrencies according to SARB regulations. In addition, Koinexpert follows all regulatory prescripts related to cryptocurrency assets. Although the company is not licensed to provide financial advice according to the Financial Advisory and Intermediary Services Act of 2002, it can offer its expertise in navigating the cryptocurrency markets to those who appreciate the risks. Furthermore, Koinexpert is ensuring all business practices are compliant so that it can apply for its FSP license as soon as the regulator creates a category for crypto-related businesses.
HOW DO I SIGN UP?
The process, from joining to trading and receiving the returns, is streamlined and requires little from clients, says Ardi. “We built a system where clients onboard using world-class KYC (Know Your Client) and AML (Anti-money Laundering) systems; it facilitates forex payments via our Registered Financial Service Provider partners and then trades client funds back from overseas via crypto and thus make a profit for the client.”
All you need to do is register (it’s free), create an account and then the process begins. It takes just a minute to register and get started. Use referral code: capetownmagazine. You could also sign up through the competition below. For questions send an email to email@example.com.
WHAT ARE THE REQUIREMENTS?
In order to make use of Koinexpert’s services you will need to be a South African resident over the age of 18, have a good standing tax compliance status with SARS, and have a minimum R100 000 trading capital (smaller trades mean lower profits and more risk). The money put down is used to buy US dollars (using a forex intermediary) that Koinexpert then uses to trade.
Once the trade is complete, your original capital is returned to you with the profit (minus Koinexpert’s service fee). “Our terms of service specify that we won't charge a service fee if a client's trade makes a loss, but we've been known to waive fees at our discretion even if a profit is made, simply as a courtesy to clients who's trades have not done as well as others,” says Ardi.
WANT TO MAKE BIGGER PROFITS?
The maximum cap on South Africa’s exchange control (put in place by the SA Reserve Bank) is a single discretionary allowance (SDA) of R1 million per year (so if you’ve already sent this money abroad, your limit has been reached and you wouldn’t be able to use Koinexpert’s services that year).
However, it is possible for an individual to apply for a Foreign Investment Allowance (FIA) of R10 million every year. Koinexpert has partnered with a registered credit provider in order to offer a product that enables its clients to apply for the full FIA annually.
ARBITRAGE TRADING: HOW DO I START?
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