Arbitrage Trading on the Platform: A Complete Analysis of Strategies and Tools

Arbitrage trading is an investment approach based on exploiting price differences of the same asset across different markets. In the cryptocurrency market, participants utilize several main directions of such activity—spot market operations, strategies related to funding fees, and trading with futures contracts. Modern platforms provide tools that automate the process of detecting opportunities and executing trades, significantly reducing costs and risks.

The essence of modern arbitrage: from theory to practice

The main principle of arbitrage trading is opening opposite positions simultaneously on different exchanges or market segments. The trader profits not from the direction of price movement but from the difference in quotes. This allows minimizing systematic market risks, as losses in one direction are offset by gains in another.

Modern tools have greatly expanded the possibilities for such trading. Now, market participants can monitor price movements and available liquidity simultaneously for two pairs or contracts on a single screen. Using optimized order execution processes achieves high accuracy, which is critical for arbitrage, where profits are made on minimal differences.

Two main risk-free trading strategies

First approach: using funding fees

This arbitrage strategy is based on the difference in fees between the spot market and the perpetual contract market. The trader simultaneously opens two opposite positions—buys the asset on the spot market and opens a short position on a similar contract, or vice versa.

When the funding fee is positive, long position holders pay fees to short position holders. Therefore, the optimal tactic is to buy on the spot market and open a short position on the perpetual contract—thus, the trader earns income from the fee difference. This is called positive arbitrage. If the fee is negative, the actions are reversed—short on the spot and long on the contract.

For example: the BTCUSDT contract has a positive funding rate of +0.01%. Traders holding short positions receive payments from those with long positions. At this moment, a trader can buy 1 BTC on the spot and simultaneously open a short position of 1 BTC on the perpetual contract. This hedging ensures profit from the fees, while losses from price changes on one market are offset by gains on the other.

Second approach: extracting profit from price differences

This form of trading works with price spreads between spot and futures contracts. If the futures contract trades above the physical asset on the spot, an arbitrage opportunity arises. The trader buys the cheaper asset on the spot market and simultaneously sells the more expensive futures contract.

For example, if BTC on the spot costs less than BTCUSDC futures, buying BTC on the spot and selling the futures locks in the spread. When the futures contract expires, the spot and derivative prices converge, and the trader profits from this convergence.

How to effectively use arbitrage tools

Features for identifying potential

The platform offers built-in mechanisms for quickly detecting arbitrage opportunities. Trading pairs are displayed based on either funding rates or spread sizes, allowing traders to see the most advantageous moments. Ranking by funding shows which contracts currently offer the highest fees, while ranking by spreads shows pairs with the largest quote differences.

Integration into a single interface

All operations are conducted from one window—users can monitor price movements and liquidity volumes on both sides simultaneously and execute both orders with a single action. This eliminates delays and errors associated with switching between interfaces.

Automatic portfolio balancing

The built-in smart rebalancing function checks the execution of orders on both sides every 2 seconds. If one part of the position is filled more than the other, the system automatically places market orders to balance them. This is critical because asymmetric execution can lead to opening unwanted positions and liquidation risk. Each rebalancing cycle lasts 24 hours, after which unfilled orders are automatically canceled.

Example of the mechanism: a trader places a limit buy order for 1 BTC on the spot and a limit sell order for 1 BTC on the perpetual contract. Every 2 seconds, the system checks the status. If 0.5 BTC is filled on one side and 0.4 BTC on the other, the system automatically places a market order for 0.1 BTC to balance. Checks continue until full execution or 24 hours pass.

Extended asset support as collateral

Through a unified account, traders gain access to over 80 different assets as collateral. If the portfolio contains various assets, they can serve as margin for opening arbitrage positions.

For example, if the latest BTC price is $30,000 USDT and this amount is in the account as margin, you can simultaneously buy 1 BTC on the spot and open a short on 1 BTC on the perpetual contract, earning from funding. Or, if you already hold BTC on the spot and the spread between spot and futures has widened, you can use this BTC as collateral to open a short position on the futures for the same amount. In this case, BTC price fluctuations won’t increase liquidation risk, and the spread will work in your favor.

Step-by-step guide to placing orders

Preparation stage

First, go to the “Tools” section of the trading interface and select the arbitrage option. There, you can view available opportunities ranked by funding or spreads.

Selecting asset and direction

Based on the ranking, choose the most attractive trading pair. Then determine the direction—long or short for one of the sides. The system will automatically assign the opposite direction for the other part.

Order parameters

Select the execution type—market or limit order. When entering the price, the current funding rate or spread is displayed next to the pair, helping to assess potential profit. The size is entered only for one side—the other is filled automatically in equal volume.

Activating protective mechanisms

It is recommended to activate smart rebalancing, which is enabled by default. This mechanism protects against asymmetric execution risk when one side is fully filled, and the other remains open.

Confirmation and monitoring

After clicking confirm, both orders are placed simultaneously. Active operations are visible in the “Active” section, and the history can be viewed in “History” as orders are executed.

Post-execution management

Once orders are filled, positions on perpetual contracts are shown in the derivatives positions section, and spot assets are in the spot assets section. Profits from funding are recorded in the transaction log on the unified account page.

Answers to critical trader questions

When exactly should arbitrage strategies be launched?

Optimal times include periods with clear spreads between exchanges, when you can lock in the difference and minimize market volatility impact. When working with large volumes or urgent portfolio balancing, simultaneous execution on both markets manages costs and mitigates fluctuations. When closing multiple positions or implementing complex strategies, precise synchronized execution prevents missed opportunities.

Methodology for calculating profitability indicators

Fundamental spread formula: sale price minus purchase price. Percentage spread: (sale price – purchase price) / sale price. For annualized funding yield: total three-day rate divided by 3, multiplied by 365, divided by 2. For annualized spread yield: current spread divided by days until expiry, multiplied by 365, divided by 2.

Use cases for closing positions

Yes, the functionality allows opening and closing positions via arbitrage tools.

Compatibility with sub-accounts

The feature is available on sub-accounts that have been switched to the unified account mode.

Availability in demo trading

Currently, the feature is not available in demo mode and only operates on real accounts.

Risk assessment with asymmetric execution

Partial execution on both sides creates liquidation risk due to uneven position distribution. Activating smart rebalancing is critical—it regularly corrects imbalances with market orders, reducing liquidation chances.

Margin mode

Arbitrage operates exclusively in cross-margin mode on the unified account.

Reasons for order non-execution

An order remains unfilled if there is insufficient free margin to open opposite positions simultaneously. Solution: reduce order size.

Disabling automatic rebalancing

Without smart rebalancing, the system will not adjust positions, leaving them to operate independently. Orders will continue to execute as planned, but the risk of remaining with an open position increases.

Stopping rebalancing if incomplete

If 24 hours pass before full execution, rebalancing automatically stops, and unfilled orders are canceled.

Viewing positions and assets after completion

After both sides are executed, positions are displayed in the respective sections—perpetual contracts in the positions section, spot assets in the assets list. Order history can be checked in the trading archive.

Imbalances when using rebalancing

Asymmetry may occur due to insufficient collateral or low liquidity on one side, leading to partial fills.

Impact of order cancellations on arbitrage positions

With active rebalancing, canceling an order on one side will automatically close the other side. If rebalancing is disabled, orders operate independently, and canceling one side does not affect the other—strategy continues until full execution or cancellation of both orders.