Summary of "#1 Trading Setup for Daily Profit | Risk Free Arbitrage"
Summary of Video: #1 Trading Setup for Daily Profit | Risk Free arbitrage
The video presents a detailed explanation of a risk-free arbitrage trading strategy in the cryptocurrency futures market, focusing primarily on earning through "funding rates" on perpetual futures contracts. The presenter introduces a lesser-known method to profit daily from crypto markets without exposure to price risk by exploiting differences in funding rates across exchanges and coins.
Main Financial Strategies and Concepts:
- Understanding Funding in crypto futures:
- Funding is a periodic payment exchanged between long and short traders on perpetual futures contracts, typically every 8 hours.
- If funding is positive, longs pay shorts; if negative, shorts pay longs.
- Traders can earn money by taking positions that receive funding payments.
- Leverage amplifies the funding returns (e.g., 200x leverage on a 0.01% funding rate can yield 2% every 8 hours).
- arbitrage Using funding rates:
- The core arbitrage involves simultaneously buying a coin on one exchange (e.g., Delta Exchange) where the funding rate is positive and shorting the same coin on another exchange (e.g., Coin DCX) where the funding rate is lower or negative.
- This hedges against price movement risk because the long and short positions offset each other.
- The trader profits from the net funding received while maintaining a near risk-free position.
- Important to execute trades close to funding payment times (e.g., 5:30 AM, 1:30 PM, 9:30 PM) to capture funding payments.
- Risk Management:
- Use low leverage (e.g., 2x) to reduce liquidation risk.
- Maintain hedge positions to protect against price volatility.
- Avoid holding positions longer than necessary; funding rates and spreads fluctuate.
- Use limit orders to reduce fees (maker fees are lower than taker fees).
- Monitor spreads and fees on both exchanges to ensure profitability.
- Execution Steps for arbitrage:
- Identify coins with the highest positive funding rates on one exchange.
- Simultaneously short the same coin on another exchange with lower or negative funding.
- Use limit orders to minimize trading fees.
- Enter trades a few minutes before the funding payment timestamp for safety.
- Monitor positions and close or adjust if price moves excessively (e.g., more than 50%).
- Repeat the process across multiple coins and exchanges to maximize daily funding income.
- Additional Insights:
- The presenter emphasizes that many traders lose money by ignoring funding fees.
- The method is not widely discussed in India, making it a "hidden gold mine."
- arbitrage profits can be substantial, with examples showing daily earnings of ₹5,000+ and monthly returns exceeding 100%.
- The presenter also mentions upcoming algo trading tools and invites viewers to join webinars for deeper learning.
Step-by-Step Guide to the arbitrage Funding Strategy:
- Step 1: Open accounts on two crypto futures exchanges (e.g., Delta Exchange and Coin DCX).
- Step 2: Monitor the funding rates on both platforms, focusing on coins with positive funding on one and negative or lower funding on the other.
- Step 3: Place a buy (long) limit order on the exchange offering positive funding.
- Step 4: Simultaneously place a short limit order on the other exchange for the same coin.
- Step 5: Use low leverage (around 2x) to minimize liquidation risk.
- Step 6: Execute trades 1-30 minutes before the funding payment time to ensure eligibility for funding.
- Step 7: Hold the hedge position until the funding payment is credited (typically every 8 hours).
- Step 8: Monitor and manage positions to avoid excessive price risk.
- Step 9: Close or adjust trades after funding is received or if market conditions change.
- Step 10: Repeat the process regularly for consistent daily profits.
Market Analysis and Business Trends:
- Crypto perpetual futures funding rates create arbitrage opportunities not commonly exploited by retail traders.
- The strategy leverages inefficiencies between exchanges and fluctuating funding rates.
- Increasing awareness and tools (like algo trading) are making such strategies more accessible.
- The presenter highlights a growing trend of using hedging and arbitrage to generate steady income in volatile crypto markets.
- Emphasis on Indian market adoption where this knowledge is still scarce.
Presenters/Sources:
- The video is presented by an individual trader/educator who shares personal experiences and live account examples.
- Platforms used and referenced: Delta Exchange India and Coin DCX.
- Mention of upcoming tools and webinars provided by the presenter’s team for further education and automated trading.
In essence, the video teaches a practical, low-risk arbitrage method to earn daily profits from crypto futures funding rates by hedging positions across multiple exchanges.
Category
Business and Finance
