-WOrk in progress-content of post is unchecked and will change for sure-
NOTE:put in some sweet diagrams ;) it gets too complicated otherwise...
So let´s say you have two accounts at exchanges and are operating with one bank account.
Your general plan has your funds spread across these 3 Accounts in a certain ratio, so you can react to the most likley or most common market situations.
But either through market surprising you or by other fault, you have too much funds in one account and too little in the other two. You want the planned balance and you want ot fast and cheap (obviously a gain is not possible right now). What do you do? For each direction the funds will go you have two options (as many as "other" exchanges). One option with one way point and one option with two.
Example:
Accounts: X1,X2,B (2 Exchanges and the bank account)
Planned ratio for X1:X2:B is 1:1:1
Current ratio is 3:0:0
All is in Account X1.
Q: What is the best way to get it where you want it to be?
-> there are 2 options for each receiving Account. Direct or via the third.
Now which is most oportune?
That depends. It depends on the time it takes the funds to arrive and be ready for trading and it depends on the cost of the chosen way of transfer.
When you send funds directly from X1 to X2, you would buy BTC for fiat, transfer the BTC and sell them again. You now have the funds on the other exchange, but you paid dearly (if you could sell at a gain, the entire question would be obsolete (But you would soon find yourself in that situation anyway).
The solution lies in calculating the cost of each option and then comparing it. simple as pie :D
Now let´s go for the formula recipe.
Ingredients you will need:
- transaction cost of all Accounts (in %)
- exchange rates you can trade at (realistic ask - bids -- not last trade ;) )
- time it takes for each transaction (especially sepa times - don´t forget weekends!)
- what you can realistically expect to gain (in % per day) during the time one way is faster than the other (you should set this rather too low - you never know what mr market will or wont do tomorrow - my first guess: adjusted alltime mean gain).
