made an app to watch for this. net fees the pnl is actually pretty darn tiny in general when the opportunities do pop up. and yeah you gotta have inventory of both btc and dollars in both and be constantly moving em around. was small enough profit to not be worth my time.

If you could buy BTC on one exchange, transfer them to the other, and then sell them all within the span of a few seconds, then there would certainly be a good opportunity.

You can't, though, so I don't really see it being feasible.  At least in the terms of an arbitrage bot.

Think again: You don't need to sell the exact same coins you bought at the other exchange. You can just deposit a few BTC/$ in each exchange, and as soon as you see an arbitrage opportunity, instantly sell/buy at both exchanges. If you sum up your total account balance, it will be larger than before.

Of course, there's some risk due to lag that might gox you.

Those are just the last prices, you really need to look at the bid/ask. Tradehill often has really wide spread. The ask will be higher and the bid lower. You could put in your own bid/ask and wait, but there is no guarentee that by the time someone bites (if they do) that the arbitrage opportunity will still be there.

But if you hold BTC, you make and lose money as bitcoins rise and fall in value. I guess the arbitrage might help to augment your gains and soften your losses, but in the end you're still investing in BTC.

nice.  they should add the Virowox exchange, some decent arb opportunities there.  I've seen bitcoins sell for like $2 over mtgox current prices. Volume is very low.   As far as I know its the only exchange that allows paypal, neteller and moneybookers deposits.  fees suck though and you have to go USD->SLL->BTC

I had to use Virwox when I started on bitcoins and was waiting a week for funds to get to Dwolla and Mt.Gox.
All I can say is... Don't! There are like 20 layers of fees, and the maximum you can deposit is very low (like $80 per several days). I tried creating Secondlife account so I could buy more $L but there are limits there too. It was a headache jumping through those loops.
A really better choice is.... CampBX! Feel free to use my referral link below
The current volume is low, but will probably pick up soon. And there's good opportunity there: last trade was at$14.00!