Funding
Funding rate arbitrage
Some traders use the funding rate arbitrage method. To do this, you need to open opposite positions on the futures and spot markets. As a result, they will offset each other’s profits and losses, but the user will be able to receive funding payments.
For example, a trader can buy BTC on the spot market and sell a perpetual futures contract on it. Thus he gets a neutral position:
▪️If the chart goes up, then the spot position makes a profit, and the futures position makes a loss.
▪️If the chart goes down, then the spot gives a loss, and the futures gives a profit.
As a result, the funding rate becomes the only source of profit and loss. The trader will make money on positive funding and lose on negative funding. If he can competently open and close such positions, then the profit will exceed the loss. This is funding rate arbitrage.
In the same way, you can combine positions with perpetual and deliverable futures.
