Contract arbitrage experts teach you how to avoid risks and achieve stable profits!

If you want to play with large funds, spot contract hedging is a great trick. Perpetual contracts incur funding fees three times a day, and there are plenty of arbitrage opportunities hidden here. How to operate? Simply put, find two exchanges, see which one has a higher funding fee, then open a short position where the funding fee is high and a long position where it is low, setting the price, margin, and leverage properly, one by one, and hedge like this to get the funding fee. As for leverage, 5 to 10 times is the most suitable; too high can lead to liquidation, while too low isn't profitable, and frequent adjustments incur high transaction fees.

Now let's talk about leveraged contract arbitrage, which is a good way to increase capital utilization. For example, if you have 10,000 USDT, you can borrow some USDT from the exchange, with a daily interest rate of only 0.02%. Then, find a contract with a total funding fee of no less than 0.03% per day, and you can make a profit. However, as more people engage in arbitrage, the funding fees won't be that high anymore. Recently, I used 10,000 USDT in leverage to buy 1 BTC on the gate exchange, then opened 1,000 BTC/USDT short positions on the bigone exchange, with daily funding fees of 0.1% to 0.2%. Of course, finding coins with high funding fees relies on your own efforts; some software can help, and I've encountered the highest funding fee of 6%!

Speaking of risks, slippage can be a headache. The buy and sell prices on both sides need to match, generally a limit order will be fine, unless there’s a major market fluctuation, otherwise there shouldn't be any issues. If you buy at a low price with leverage and open a short position at a high price, you can still earn some spread. When selling with leverage, set the order price a little higher than the contract stop-loss price to reduce slippage.

Another risk is incurring losses. Generally, if the price rises and you sell at the set price, you won’t incur losses. But if the price suddenly retraces, and the leverage is forced to the liquidation price, while the contract is forcibly closed for profit, then you might lose money. Therefore, during significant pullbacks, it's best to close your position in advance; safety first!

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