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Futures Funding Rate Strategy | Binance Funding Premium
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- Опубликовано: 14 авг 2024
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Full blog post at: jamesbachini.c...
In this video I set up a delta neutral strategy to earn funding rate premiums on Binance. I buy a spot position and short sell a futures contract to collect the funding premium.
00:00 Introduction
00:12 How Futures Work
00:49 Current Funding Rates
01:09 Futures Funding Rate Strategy
01:42 Funding Rate Strategy On Binance
03:26 Compounded Interest & Sustainability
03:56 Conclusion
There's more content about crypto, passive income and online business on my blog at jamesbachini.com/
Most of the code I write and talk about is open-sourced at: github.com/jam...
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One scenario to keep in mind.
If you are long on Spot and use a futures short to hedge you have the potential to get 2 things: 1 funding as long as the fund rate is positive, 2 IF price does move down you have the option to take profits with either closing partial or full position. This gives you the opportunity to buy more of the spot at a lower price.
Hedging correctly with a short futures position has more benefits than longs by themselves.
Interesting idea, however the math does not add up. Assuming a market snapshot shown @ 2:22, the spot cost will be the following: Spread of (0.038848 - 0.038847) / 0.0038847 = 0.257bp (basis points), plus taker fees 2 * 10bp = 20.257bp. Cost for futures roundtrip trade is (0.039026 - 0.039006) / 0.039006 = 5.1bp + 2 * 4bp = 13.1bp, Summing up to a total rountrip cost of 33.357bp, leaving you with a profit of 40.1 - 33.357 = 6.743bp, assuming stationary slippage and a constant funding rate. Still it would be a yearly return of (1 + 6.743 / 10000)^(3*365) = 2.092x. This could further be improved by using limit entry orders and using BNB for fee deduction.
Your calculations are wrong, because fees and spread are paid only on entering a position, not once per every funding cycle (every 8 hours). You calculated as if he had to enter the same position 3x every day for a year. Ultimately the profitability would depend on the duration of the position, so your calculations are only relevant if we enter and exit for less than 8 hours.
@@SoaringSuccubus even more often as he has to rebalance not to get liquidated constantly.
@@mkbbk7722 Didnt he short 1x?
@@mkbbk7722 an asset needs to rise 100% for you to get liquidated, plenty of time. You can even set conditional orders on both sides to be on the safe side.
Also you can remove liquidation risk if you use the COIN-M futures and use the spot coin as collateral. Been trying to explain this to people for a while but you're the first that's actually SHOWN how it's done. Annoying thing is the funding rates dry up sometimes and you have to switch which can be costly, selling the quarterlies is a bit more relaxing :)
I feel like I could do with "more relaxing" in my life right now after watching the BTC chart for the last hour 🤣. Thanks I'll take a look.
@@JamesBachini haha I thought BTC had become a stablecoin, it broke the wrong way unfortunately
"Also you can remove liquidation risk if you use the COIN-M futures and use the spot coin as collateral", i am interested to know. can you please explain what do you mean...? thanks
Basically using Bitcoin as collateral to sell the future. So you buy Bitcoin on Spot markets and then sell the bitcoin futures contract using the previously purchased bitcoin as collateral.
This video is great!!
I am new in the crypto community. But I came across some valuable things about Enecuum. I believe it’s the best time to jump in
Hi James, Thanks for the video. One simple question I want to ask is. You have bought a coin in sport price with 50 dollar and same coin you are shorting using future market with 50 dollar amount to get the funding rate in ur account. As you have short position on coin, if the coin price moves up, your position will be liquidated right??? So how do you keep on getting funding rate for a year
You rebalance the collateral in the two positions when price moves. So if price goes up the short loses money but the spot makes money. When risk parameters are hit you sell a proportion of the spot asset and move that collateral to the futures exchange. Your position size in terms of the crypto asset would go down but relative to the USD it would stay the same.
@@JamesBachini incurring more transaction fees so the math no longer adds up.
Great advice, James! I am trying to get into future trading but there is some more ideas/questions that I need to understand.
1. You are showing how to harvest the funding rate of perpetual crypto futures. But what about "delivery futures" for example quarterly? I saw that they are trading mostly higher than the spot price on binance. How about just buy for the spot price, instantly short sell the quaterly future and then wait until the future expires? Would that work? What are the pros and cons of this strategy compared to the one in your video?
2. I saw quaterly ETH futures on binance are trading over the spot price but on kraken they seem to be always below. Why is that so?
Many thanks in advance!
Hi Phil.
Yes quarterly futures are a good way to play it if you want to buy and forget for a few months. One consideration is if implied volatility picks up and the price goes parabolic then the gap between quarterly futures and spot can increase temporarily. i.e. if bitcoin went to 100k tomorrow the quarterly futures might trade at 110k so you need to be careful with margin and leverage on the futures side.
2. I don't use Kraken but it sounds like I should. I know the Chinese exchanges trade at a discount on futures too. It's an open market so depends what market participants are doing. On Chinese exchanges there are more miners and less speculators compared to Binance/FTX, maybe this is the same for Kraken but I don't know. Could also be because Eth has hit the top of a channel and someone expects it to underperform bitcoin over the next few weeks.
I wonder how long we need to keep the position open to claim the funding fee, let's say we are not hedging our position. Can we open it when 1 minute is left on the timer and claim the fee afterward? What is the minimum time required?
I think trading fees would eat in to any profits for holding a position for a single period.
Thanks for the great info!
This just blew my mind
funding rates are not about having more longs than shorts but about the percentage they are overpaying according to market value at a specific exchange. Also the futures funding are different
Hi James, thank you for the video!
I'm trying to understand the futures market. I still have some questions:
Alice bought a long position from Bob (who sold = short). When Alice closes a postion (sell), got she paid by Bob (buy) or by Binance? I don't really get it. Alice wants to close the position but maybe Bob didn't intent to close yet? Or does Alice receive the money from someone who just shorted? And when Bob got in the mood to finally close his position, he doesn't get paid from Alice but the person who just sold? And why aren't there funding rates in perpertual futures at binance?
So think of it as an open order book where people are bidding to buy and sell contracts. The price is pegged somewhat to the underlying asset via a few mechanisms. Price difference between the future and the spot price. Then there's the funding rate discussed in the video.
To answer your question specifically if Alice wants to sell her long position and Bob doesn't someone else will step in and take that trade because at a certain price it becomes an arbitrage opportunity.
Great stuff, thankyou
What percentage of the minimum funding fee should I choose?, in order to make a profit and cover the order fee, etc....... is 0.2% enough?
Hard to set an exact number as it'll depend on yield targets, longevity of trade and order execution efficiencies. 0.2% is pretty huge if that's every 8 hours.
That was great. Thanks!
Great video. Just wondering though, if Coin-M futures or USD-Futures... where does one actually go to see the funding payments being made?
I used USD futures but COIN futures could work as well to hold collateral for the future directly.
If you go to wallet > futures > transaction history you can see a transaction type called FUNDING_FEE
Hi James, thanks for the vid, great work. Quick question, I'd like to do that strat but I have an almost 1 on 1 collateral margin required... if I buy 1 btc and sell 1 fut, I need 60k in usdt as a cost... so the strat becomes capital consuming since i need to buy 1 btc AND have the equivalent in USDT... why are my margins requirement so high ? VIP level of my account ?
solution would be to coin marginised but funding rates are somehow lower
You could leverage your position on the future if you are happy to actively manage it and add more collateral if required.
The other thing I've been looking at for BTC is fixed date futures on FTX. December futures were trading at a $16k premium yesterday and you can use BTC as collateral for the futures position. That might be more optimal if you want to lock up funds for some time.
@@JamesBachini thanks James, thats great !
Hello
Anyone can help how to get e mail notification that when the some coins funding fee rate is in binance futures increase positive %1 or higher and negative %-1 or higher ?
Thank you
Would need to build yourself a custom solution I expect as haven't seen anything like that which would work out of the box
if i have a position opened in Futures but have no funds spare available. how will the funding fee will be paid to the other side?
You would need collateral to hold any futures position. Funding fee is taken from collateral. If collateral drops below the margin requirement (3% on most cexs) your position is liquidated.
Thank you, obviously binance doesnt tell this to the users lol
sorry for being a noobie, what you saying is i buy the same coin in the spot and future ( short position ) to earn the funding rates? I saw the funding rate some has negative and some just positive i guess, whats the difference? i will try this technique and see how it goes. thanks. By the way how do i exit the strategy? is it just hold as long as i can?
You want the funding rate to be positive so longs pay shorts the funding premium. You short the futures to collect the premium and then hedge your position by buying the underlying asset on spot markets. If the funding rates go negative you would be losing money each period with the position open. To close it sell the spot assets and close the futures position
@@JamesBachini thanks for the tip and i will try it out :)
Regarding close position, do we close immediately after the countdown? thanks again
@@minidv7596 depends on the funding rate if it's still good then leaving the position open for as long as it's viable will reduce trading fees which eat into profits
Just afew questions though. On biannce:
1. are you using the coin margin futures or the usd futures?
2. do you transfer the asset that you bought to the futures platform as the collateral for the short futures or leave it in spot?
I was using USD futures but a few people have pointed out that if the asset is available to use as collateral then coin futures makes it easier to manage.
If Funding Rate
for example is -0.4, Than need BUY LONG ?
If funding rates are negative the basis trade doesn't work
Hey considering we keep a long open through out the bull market and pay ~5$ every day +-5 It would still be profitable considering that coin go parabolic or even just 2x?
Also what if you sell every 1 minute before funding rate? would that work?
It's hedged so the asset going parabolic wouldn't affect the profits except there's be a lot of longs and a high funding rate most likely. Trading fees would eat in to any profits from trading every minute.
@@JamesBachini No sorry let me rephrase my question.
1- Open a long position for a few months knowing there will be an altseason eventually during that you'll make way more profit even if you're paying 10$ per day everyday for the next 3 months - that makes it around ~1000$ of funding fee (Upper end) why is this not recommended? considering a 1-2$ movement in a coin at 20X can easily make that much?
2- Since funding fee is charged everyday at specific time let's say at 9PM - can I close my long position before 9 PM and open it again at 9:01? Do this every 8 hours before the funding fee is paid? Is this possible? You'll completely skip the fee no?
1. If you are certain about market direction then a 20x long will outperform pretty much anything. But I find it hard to really know what the market will do with any certainty.
2. Trading fees to get in and out of the position will likely be more than the funding premium.
@@JamesBachini Great thanks a bunch!
Many thanks for the vid but i still have some doubt that would like to be clarified.
Say 75k BTC is the peak then goes bear market for years. So, decided to short the market for long period of time (2-3 years in perpetual future BTCUSDT)
My question: How does it affect for long-term shorting of BTC with correlation of the funding fee to my portfolio? Does the fee eats up alot as I hold longer? Is it even advisable? (Lets just assume 75k drops and bears for years which is favourable to my short trade)
Sorry for the newbie question!
Funding rate can fluctuate from positive to negative. If everyone is betting it will go up then longs pay shorts a premium to balance the contract. Over a multi year bear market the funding rate would likely turn negative at some point and you'd be paying to hold a short. In crypto it's generally net positive over a long enough period of time though.
Very interesting video, Thanks! I don't get the compounding though. In your blog you say 1% a day will equal 3678% compounded yearly. Divided by 2 for hedging. Why is it not 365% divided by 2 for hedging. Will binance compound your funding fee as long as you keep the position open?
I worked it out as daily compounding. So on day 2 you also earn interest on the gains from day 1. Try this online calculator and set the interest to daily www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php
@@JamesBachini I see, thanks. I think montly compounding would make more sense because otherwise you would have to take new positions every day. And with a starting amount of say a 1000$ That is not going to work. But still if i use your calculator and go for 30% monthly and compound monthly you get an APY of 2200%. Divided by 2 this is still awesome. I just opened a future account and will try to get my feet wet. Thanks for the video!
@@robbertdezeeuw1198 how has it been so far?
You are talking about the code, but the code referred to in in this video I cannot find so I guess it is closed source. I was hoping to find a few examples on how you execute the limit orders automatically. Or you are still manually buying/sellng when the funding rate is right?
I done some tests on effective order execution for this purpose. Code was open sourced here
github.com/jamesbachini/Order-Execution-Tests
There's also a video on the channel about it. I still use trading bots based on this.
Hi - What if, our futures trade is going against us and we have to pay funding fees? Are we making a profit in that scenario given that we have to pay trading fees for our spot trade?
So you shouldn't be paying a funding fee unless rates are negative. Longs pay shorts when rates are positive. Some exchanges will also do zero trading fees for maker orders or even rebates for trading volumes or holding exchange tokens.
but if half your account is in a 20 leveraged short and you get liquidated which is a piece of cake in crypto... your downside is huge. What am i missing?
You can use coin based futures so that the collateral is in the same currency position as the short position. If price goes up the USD value of your collateral increases inline with the short position losses. It's a hedged position so you collect the funding fee. For tokens that you can't use for collateral you can use a bot to manage position sizing and lower leverage.
Great thank you very much for making the effort and time to create this!! I think I managed to get it working! the rates seem a lot lower right now!
1)so where does the interest go?
2)How do I do the compound interest?
3)and when do I get in and get out ?
4)How long do I leave everything in there for?
Yes it dropped a lot after the mini crash on the 18th April. Premia rates have been moving up again the last week as the market is starting to look good again and traders are taking more long positions.
Just saw the questions sorry.
1. It goes to the account where you short the future. You will see premium payments in the transaction history.
2. Reinvest the premiums regularly
3. Best time to get in is when there's a lot of speculation and the market is going parabolic. Best time to get out is when there's a crash and the funding rates reset. This is more important with quarterlies than perps.
4. Just keep an eye on the premium rate and leave it until you aren't happy with the returns. If the market takes a big downturn the premium rate can turn negative at which point you'd want to close the position.
@@JamesBachini I have a position opened right now and my funding rate is -0.0074% what should I do ??? I have place 17$ with 15X leverage Long call !!
@@Jaypatel-up4jg if the funding rate is negative then you are paying a premium to hold the position because there are more people short than long. You only want to hold a cash and carry trade when the funding rate is positive and there's a net gain.
@@JamesBachini so should I close my position ?? It's -0.0085 now ! And I am little bit close to reach my targeted exit price
what's the difference between when the rate goes positive or negative and who gets paid when it changes?
Longs pay shorts when positive. Shorts pay longs when negative. Changes hourly on FTX and every 8 hrs on Binance depending on market sentiment and the volume of longs Vs shorts on the contract
when you took position in Futures, did you use 20x leverage as it appears to be the case. can you please confirm? Thanks
No I didn't use any leverage in the video. It depends how volatile the asset price is and how actively you can manage the position. 20x is suicidal unless you have algos in place to move money around as a 5% move, which can happen in minutes, would liquidate the short.
@@john1770 hey John are you able to share how you manage risk with that much leverage? I take it timing the market is key when there's no room for error?
@@john1770 Do you have an automated bot set up or are you doing this manually? I'm just looking at FTX and at 20x leverage its estimating I'd get liquidated at $47,584 when current price is $48,477. How do you avoid getting liquidated during market volatility?
When you press short sell on perpetual screen you have 20x cross selected.... Will this not have impact on your trade profit?
@@1Crypto I might have had 20x cross margin leverage available but I wasn't executing the trade at max leverage.
If the point here is to get the funding rate and you get the funding rate by holding a position why can't you hold a short position of $10k and a long position of $1 (or vice versa...new to this) won't you get the funding rate perpetually. And I know you are not leveraged in your example
Because if the price goes up you'd lose money. Idea is to be delta neutral so price movement of the asset doesn't impact the result.
@@JamesBachini what if the price was so extreme it like btc at $1 and $200k where it would get there ....
@@IlanPerez you might need to rebalance in extreme scenarios but of you buy 1 BTC on spot and short sell 1 BTC on futures you are still net 0 and hedged against price movement.
Do you worry about price differences in the spot vs the perp?
Depends on the timeframe of the trade. It's certainly something I take more note of when trading quarterlies long term. Only time I ever saw the perps get way out of line was recently with the OHM snapshot a few days ago. The spot was trading at a massive premium which closed as soon as the snapshot was done. Generally the price moves in line with the spot price and funding rate. Perhaps might be worth doing more research on low liquidity and newly listed alts here to look for opportunities.
there is something i didnt understand, you did this spot and future usage to balance your investment right ? but in futures you went for 20x ? why
I didn't use leverage in this video. 20x is the maximum available on the exchange but I just balanced the amount of tokens to the spot amount and purchased 1286 spot and shorted the same amount 1286 on futures. Collateral was split evenly so leverage would be ~1x (not borrowing anything)
Really liked your video but i have question
I am pretty confident that market will go up and i want to hold my long postion of btc and eth for 2 to 3 month so is it worth it to hold or the funding rate fees will eat up all my gains ?
Depends how much it'll go up. Funding rates are creeping up again so it will eat in to your gains but if BTC and ETH go parabolic it likely won't matter. The other option is to buy a quarterly future to "lock in" a rate.
Thanks for the vide, but you cannot do delta neutral for the other way around right? e.g. shorting spot and longing perp
How would you short spot? Maybe if you already had a position you could lend the tokens out or something but generally it's the other way around. If funding rates are negative you can effectively get paid to take a long position which in crypto markets has been a historically good trade
@@JamesBachini I suppose you can short perps in a different exchanges and somehow arb the difference to get achieve a net positive funding rate. I think basis markets has something like this. Although it doesn't sound too stable given how funding rates are usually positive.
Very interesting, thanks ! 👍 Can you share an example of the code to automate this type of strategy using Binance API by DM ?
Hey Hugo I don't really want to publish or share the code sorry. It's not because it's special but because of dependencies (it runs on a larger bot framework for algo trading) and partly because it's currently being tested in production and probably shouldn't be used for financial transactions. Basically all it does is place a limit order on Spot and then execute the opposite market order when this is filled, repeat this until the position is set up. If fees aren't a major issue you could just place two market orders simultaneously and it could probably be done with a Binance npm module and 5 lines of code. Binance also provides some useful endpoints for checking funding rates. There's some more details on those here: jamesbachini.com/futures-funding-rate-strategy/#automating-the-futures-strategy
lol man, do you think everything is for free ?
Awesome video! This may seem like a dumb question, but it is advisable to put a stop loss in on the futures position or does it not matter because if the price goes up a lot it wouldn't matter as that has been earned from the value increased on the spot trade?
It's important the position isn't liquidated or closed so there always needs to be enough collateral to cover the position and this needs to be managed.
@@JamesBachini Thanks for the response. So for buying £10k of say XRPUSDT at spot rate and then buying that same amount purchased at the spot rate as a short futures contract how much collateral would be needed and where is this added on Binance? This is the only part that is confusing me right now.
@@brendonh690 Margin rates for USD futures on Binance are here:
www.binance.com/en/support/faq/360033162192
It isn't a good idea to use max leverage available unless you have a bot to move collateral into the futures account automatically if the position moves against you.
@@JamesBachini Thanks again. Could you do this but have leverage at 1X on the futures trade? Then I guess wouldn't need any collateral?
@@brendonh690 in some markets you can use the spot asset as collateral for the futures position. At 1x leverage on a USD futures market you'd split capital between spot and future.
Is it possible to do this strategy with negative funding, selling on spot and then placing a long contract?
It's harder to hedge and not viable from anything I've seen. Essentially the strategy makes money from speculators demand for leverage which in crypto is normally long when there's significant interest.
Hey James great video congrats! I was wondering if you are willing to do a 101 session to help me setup the trade and answer some specific questions abou exposure and amounts.... I would be willing to pay for the session of course. : ) Looking forward hearing from you!!!
Hi Scharan, it's not something I can do sorry. Time poor and probably not in a position to be consulting on something I am still figuring out myself. With regards to exposure and amounts, I'd recommend using tiny test budgets to start with. Keep margin on the futures side low enough to be manageable without risk of liquidation. Experiment with execution too. I still haven't got this bit right and am thinking of building a bot to get in and out of the trade and test different order execution strategies.
Sure man I do understand... But yeah definitely the ideal scenario would have everything done trough APIs. I will start testing with smaller amounts to see working on the long run. For how long have you being doing this? Did you lose money at any moment?
And just to make sure the math is correct.... let’s say I have 200k to invest. I can put 100k on the Spot Market and 100k on the future market.
Suppose that I invest on an asset with a 0.01% Funding Rate. That means that every 8 hours I’ll receive USD 10 and at the end of the month around USD 1,200 (if the rate was flat).
You don't actually need 50% in the futures account because margin will be available but you need to manage risk on that to avoid getting liquidated and potentially add collateral if required. How much depends on what you are going to use for collateral and how actively you can manage it. There will be fees and slippage to take into account and bare in mind that the funding rates are good right now because everyone is long. If markets crash then potentially funding rates could go negative and you'd be paying to hold the position. Also a few people have suggested using quarterlies instead of perps as it's a simpler trade.
Yeah I could use Margin... but for the sake of the example I didn’t use them... As far what you mentioned about the Fees turn negative because the market is Bearish I could just exit the trade and open a reverse trade instead... Am I correct? Maybe not cause I wouldn’t be able to reverse my position on the Spot market right?
Hey James. Does the fee come out of the initial investment or out of your profits ? I notice my margin fluctuates as the price moves up n down. Thanks !
It's taken from the collateral you post at regular intervals. Think it's hourly on FTX and every 8 hours on Binance
@James Bachini thanks bro
Hi James great video thanks for this. I do have some questions.
1. When exactly to close my position
2. How do you beat spot trading fee? mine is at 0.1%
Thanks in advance and keep up the good work!
1. Monitor the funding rate and other opportunities and allocate funds accordingly.
2. Use a different exchange perhaps. On FTX they offer zero fees and actually pay a rebate on maker transactions if you stake FTT.
@@JamesBachini thanks for your advice!
Is it wise to hold the position until the funding rate turns into negative?
@@0xgenji No if the funding rate is negative you would be losing funds by holding the position so you would want to close it
@@0xgenji i guess not
@@JamesBachini FTX 🤣, time changes fast...
What about the cost of your trades? Wouldn't that be more than the profit?
Depends how long you hold the position. When this video was made a year or so ago funding rates were consistently high across the board
What about transaction fees and slippage here? I see you placed market orders
Better to use batched limit orders for significant positions. More info here
jamesbachini.com/order-execution-strategy/
Also, I've been trying to take up this strategy but.. not sure where the funding fee is being accumulated. I can see them in the "transaction history" but it's not building up in my "future wallet asset". H..Help.. THanks!
binance doesnt add this by default, you need to do the maths on external portfolio management software for ex accounting or blockfolio, but they are quite limited . best way is to use API to download your transaction history and use a script to do the stats. But this requires coding ....
After how much time exchange charges fee for future trading...??
Off the top of my head FTX is every hour and Binance is every 8 hours. Might need to fact check that though. Bybit I am 90% sure is every 8hrs as well.
how I can see reflected interest of Funding rates in my account?
Transaction history page
you can hedge with non perpetual contracts also ? perhaps more risky, but we can have more leverage
You can just need to add any costs involved in rolling the contracts over on a quarterly basis
@@JamesBachini yeah you right, but small drift between perpetual and quarterly might pay for that, i don't really know, i will need to do the math
@@Lk77ful I think it will depend on market conditions as well. When things get frothy the perps are more widely used by retail and get quite juicy. FTX has some longer term futures contracts as well which might be worth looking at from a set and forget perspective when things pick up.
@@JamesBachini ive done the math and i make around 80$ in 33 days, with a 400$ margin and 25× leverage (100×/125x for perp), not bad, that's free money with no risk, and each month i can invest that money back, which increase by 20% the yield. In the end thats not a lot of money compared to swing/day trading but the fact that there is no risk and its automatic is very interesting.
I paid 1.6$ for a 4000$ long on quarterly, not that much
@@JamesBachini also something i did not consider, but if the price of the asset goes up, the position size also goes up and the fees goes up the same way
Is it balance? You put 20x in leverage while 1x on spot
I have 20x leverage available but didn't use it. I purchased 1286 Reef spot and sold 1286 Reef futures balancing the position. Leverage depends on collateral but position size is the same.
So THIS works like dividend hunting on stock market?
Not exactly. Cash and carry trades are common in traditional markets as well where futures are traded at a premium.
but wait - if the funding rate is paid by longers to shorters, then doesn't your 'long' position pay the same amount out as your short position takes in?
The long is on spot markets where you just buy the asset outright
@@JamesBachini ah, of course! Thanks.
how long do you normally leave these positions? Just check daily to see what the funding rate is? I guess there isn't a 'funding rate level' alert or trigger...?
@@asdfjklasdfjkl1988 short term as when the markets are bearish the funding rates drop right off, which is where we are right now. If you want a longer term trade look at the quarterly futures when the markets get frothy.
how can we farm negative funding rates bro?
Markets have changed quite a bit since I made that video. Basis trades are best in frothy markets when there's maximum demand to get long
Thanks James, I think its the same strategy pionex got it as spot-futures arbitrage bot? Would you think using the bot is good alternative?
I'm not familiar with it but might be bad timing as funding rates are low because of the bearish market sentiment.
Only works on bull market?
Yep when there's demand for leverage on exchanges. This brings the funding rates up.
Do you still do this even in this bear market?
Depends on funding rates which don't get as out of line when there is less demand for leveraged longs
plz give nifty script
Futures related to liquidation. It not work efficiently as you will loss all the capital once liquidated.
helo bro,i want to ask i m Now in 500$ gain in futures and i m planning to hold forn5 years...pliz tell will be i profitable?Even if i m charged fees
?
Buy the asset on spot markets if you want to hold for years.
@@JamesBachini and what if i buy on futures and hold for 5 years?
@@premiujyt1248 you'll pay a lot in funding fees
what about liquidation risks?
Only really applicable if you use leverage on the short side. In crypto you can also use coin based collateral on many exchanges which makes it easier to use leverage safely as the spot side provides collateral for the futures.
@@JamesBachini coin based collateral exchanges included?
@@ggmtddbo FTX, Binance most crypto native futures exchanges
@@JamesBachini thk!
Funding rates are at low right now. When do these rates go up?
When everyone gets long because prices are going up again
@@JamesBachini yeah make sense. I am doing option trading and making APY of 90-110%, in meantime I want to do something with crypto world. Can you tell me some different strategies according to risk and APY that beginner should look into? So far looked into lending and staking looks promising.
@@vaji4465 maybe look at yield farming stablecoins
@@JamesBachini If you ever get time in future please make crypto roadmap video like this. ruclips.net/video/7k7ETzqOxn8/видео.html&ab_channel=codeSTACKr
@@vaji4465 Great idea, thank you
You shorted 2x, shouldn't it be 1x?
Should be balanced to the spot position to give a delta neutral position. Leverage will depend on amount of collateral used in futures account. Balance from futures funding payments should show up in you futures account.
ok
does this really work??
Not in a bear market because less demand for leverage means funding rates don't get out of line as much
@@JamesBachini thanks for your reply. So cannot depend on this anymore these days?
@@randomcommentpopup I mean the basis trade is still there but it's not as profitable as when I made that video. Whenever crypto is in a bull market and there is high demand on exchange for leverage then futures funding premiums go through the roof
So can u suggest any method for a newbie to earn in this situation please. Also what should i learn first. Pls help me.
@@JamesBachini plsss help me bro i will do anything as you say
Unfortunately your accent makes it so hard to understand you
James, WTF man.. stop giving away all the secrets
Lol those funding rates went to s**t after I published this video. Conspiracy theorists might suggest it had more to do with the market pull back but who knows 🤣
@@JamesBachini they come and go mate, bit slow at the moment but they always pick up again as speculators come back ;)
btx get pozi will go to 0 hahaha
Btx?