Cross‑Exchange Z‑Score Arbitrage: A Practical Playbook to Trade Short‑Term Mispricings in Bitcoin and Altcoins
This guide shows crypto traders how to detect, measure, backtest, and trade short‑term price discrepancies across exchanges using a z‑score spread approach. You’ll get practical rules, execution tips to minimize slippage and fees, and a risk framework that works for Bitcoin trading and liquid altcoins — with notes for Canadian traders using local platforms like Bitbuy or Newton.
Introduction (100–150 words)
Markets aren’t perfectly efficient. For milliseconds to hours, the same instrument (e.g., BTC/USDT) can trade at slightly different prices across exchanges. Cross‑exchange arbitrage captures that differential. This post focuses on a practical and robust method: measuring the exchange spread as a time series, converting it to a z‑score (standardized spread), and trading mean reversion signals. You’ll learn how to build the signal, backtest it, execute with minimal slippage, and manage operational risks like transfer latency, fees, and exchange reliability. The approach fits traders who want data‑driven crypto trading, whether you keep capital on several exchanges or pair spot positions with futures hedges.