Arbitrage using the "Futures + Futures" strategy

This strategy involves working exclusively with futures. You open a short (sell) position where the price is higher and a long (buy) position where the price is lower. This strategy is similar to the Spot + Futures approach, but instead of spot, you are dealing with futures on both sides.

This strategy is particularly convenient for smaller capitals, as it allows the use of modest leverage, which, of course, increases risks but also enhances earning potential.

Imagine you find a price difference through a screener. On Exchange 1, the futures price for Token X is $1,500, while on Exchange 2, it’s $1,600. You open a short position on Exchange 2 and a long position on Exchange 1, waiting for the prices to converge. There are three possible outcomes:

1. The Token Price Increases, and Convergence Occurs at $1,800 the long position generates a profit of $300, while the short position incurs a loss of $200. Result: Net profit is $100.
2. The Token Price Converges at an Intermediate Price of $1,550: the long position earns $50, and the short position also earns $50. Result: Net profit is $100.
3. The Token Price Falls, and Convergence Occurs at $1,300: the long position loses $200, while the short position gains $300. Result: Net profit is $100.

Let's look at an example:

Earnings on the convergence of futures prices on the Bybit and XT exchanges.

The average entry price for Bybit was $3.0746, and for XT $3.2391.

We can already lock in profits. There are 2 strategies - wait for the full convergence of prices or close in a small plus.

It was decided to close the deal. They closed the market due to the fear of placing orders.

On Bybit, the long closed at +34$.

On ХТ the short closed at -6.19$.

It turns out that we just earned $27.81 on the convergence of prices.