Understanding Arbitrage Orders
What is Arbitrage Order
From a market perspective, when the market fluctuates irrationally, prices may deviate from normal levels. When arbitrage funds participate in trading, they promote prices to return to normal more quickly. During the process from abnormality to returning to normal, arbitrage funds earn certain low-risk profits. The arbitrage order strategy involves users observing two markets in real-time during arbitrage trading, placing orders simultaneously, and requiring the two orders to be executed as simultaneously as possible. It is a strategy that captures funding rates or price spreads, including two major categories: funding rate arbitrage and spread arbitrage. Spread arbitrage is further divided into basis trading and calendar spread arbitrage.
**Funding Rate Arbitrage: ** Conducting two trades in opposite directions with equal quantities in spot and perpetual contracts that offset profits and losses, with the goal of earning funding rate returns in perpetual contract trading.
**Basis Trading: ** When there is a large price spread between delivery contracts and spot of the same cryptocurrency, buy the lower-priced side and sell the higher-priced side. When the spread between the two narrows, close positions to harvest profits from the spread reduction.
**Calendar Spread Arbitrage: ** Buying and selling contracts of the same cryptocurrency with different delivery dates, utilizing spread changes for arbitrage. However, calendar spread spreads don't necessarily return to zero, so the risk is slightly higher than basis trading.
How to Use Arbitrage Orders
1) Open OKX App, select [Trade]-[Strategy]-[Combo Arbitrage]-[Arbitrage Order]
2) Taking SOL perpetual contract funding rate arbitrage as an example, in the depth chart, you can view [Current Funding Rate]. When the funding rate is positive, longs pay funding fees to shorts. At this time, short the SOL perpetual contract while simultaneously buying an equivalent value of SOL spot to offset price fluctuation profits and losses, and you can earn the funding fee at the next settlement.
3) On the order page, fill in the order price, quantity or amount for the SOL perpetual contract on the left, select two-leg order below, and "Either leg fully filled, other leg market order" to ensure that after one leg is filled, the other leg can be executed in time, avoiding slippage. After successful order placement, SOL spot will be bought while holding a SOL perpetual contract short position. Regardless of price fluctuations, perpetual contract and spot profits and losses offset. In the funding bill, you can see funding fee income for each period.
Note: If you need to stop arbitrage orders, you need to manually close the SOL perpetual contract short position and sell SOL spot.
Disclaimer
This article may contain product-related content not applicable to your region. This article is intended to provide general information only and does not take responsibility for any factual errors or omissions herein. This article represents only the author's personal views and does not represent the views of OKX. This article is not intended to provide any of the following advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell or hold digital assets; or (iii) financial, accounting, legal or tax advice. Holding digital assets (including stablecoins) involves high risk, may fluctuate significantly, and may even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For questions regarding your specific situation, please consult your legal/tax/investment professional. The information appearing in this article (including market data and statistics, if any) is for general reference only. Although we have taken all reasonable precautions in preparing these data and charts, we assume no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less from this article may be used, provided that such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state: "This article is copyrighted © 2025 OKX, used with permission." Permitted excerpts must cite the article name and include attribution, for example "Article Name, [Author Name (if applicable)], © 2025 OKX". Some content may be generated or assisted by artificial intelligence (AI) tools. Derivative works or other uses of this article are not permitted.
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What is Arbitrage Order
How to Use Arbitrage Orders
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