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Funding Arbitrage
Funding arbitrage is a strategy that attempts to capture funding payments while reducing some of the directional price exposure of a perpetual futures position. A common structure involves holding opposing exposure in spot and perpetual markets, although the exact strategy can vary.
Why it matters to you
Funding is not only a cost faced by directional traders. It can also create opportunities for traders attempting to capture differences between spot and perpetual markets. These strategies are not risk free. Execution, basis changes, fees, liquidity, platform risk and funding rate changes can all affect the result.
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