Launch of Funding Fee Arbitrage on Apr 25, 2022
Dear Valued Users,
Huobi Global will launch a strategy on how to arbitrage from funding fees at 10:00 (UTC) on Apr 25, 2022. We sincerely invite you to give it a try!
Click HERE to give it a try!
1. What is Funding Fee Arbitrage?
Simply put: traders hold two opposite positions with the same value in the "spots" and "derivatives" trading respectively. It aims to hedge the risks brought by large price movements while you try to earn funding fees.
2. How to Earn Funding Fees?
USDT-margined Swaps are settled every 8 hours. After each settlement, traders shall pay or receive funding fees, depending on the current-period funding rate and their positions. When the funding rate is positive, long position holders will pay the funding fees to the short position holders. It will be the opposite when the funding rate is negative.
3. Why Use Funding Fee Arbitrage?
(1) Stable Earnings: the funding rate is usually positive. You can keep earning funding fees as long as you hold a short position of derivative trading and a “buy” position of the same value in spot trading. The strategy is especially applicable for traders who want to diversify their investments and seek long-term steady growth.
(2) Lower Risk: if you place a “buy” order in the spot trading and short a contract in derivative trading with the same value, the total value will not change with the price swings, except for the attendant risks.
(3) Simple Operation: only three steps required; sit back and wait for your settlement and arbitrage.
4. How to Operate?
(1) Select a pair with high APY
(2) Buy the pair you select in the spot trading as below
(3) Go short the contract of the same pair with the same value in the derivative trading as below
- Liquidation Risks: To reduce risk, traders may use 1X leverage for both spot and derivatives trading, or set the Stop-Limit feature in advance.
- Funding Rate: funding rate will change with the markets. Please closely pay attention to the funding rate changes and close your positions to lock your profits when your expected return is reached.
Apr 25, 2022
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