Note: What is described below is not financial advice, but rather an invitation for users to learn more about trading strategies. Users are always advised to research as much analysis as possible before making any trade. The information below is not intended to provide guaranteed profits, and BitMEX will not be liable if your trades do not produce the results you expected.
Making money using cryptocurrencies, especially derivatives, is not always easy. That’s why we launched BitMEX Alpha, a series of articles sharing the secrets to trading potentially profitable instruments on BitMEX.
This time we will cover the platform’s native trading transactions, specifically MATIC (Polygon) and LINK (Chainlink), which include buying spot and selling perpetual futures contracts.
How does it work? The contract described below has a high funding rate (buyers pay short every 8 hours purchased), which means that traders who sell the contract should receive a relatively large funding payout.
Let’s find out.
What do we have?
Below is a breakdown of BitMEX’s MATIC and LINK funding rates.
|
token |
strategy |
Latest funding rates (at time of writing) |
Annual interest rate (based on recent loan rate) |
|
Matic |
long MATIC_USDT (dot)
|
0,0984% |
107,7% |
|
link |
long LINK_USDT (dot) short LINKUSDT (indefinite) |
0,0760% |
83,2% |
The right-most column, “Annual Percentage Rate (based on last funding rate)” shows the annual return you can earn through underlying trading for each token.
How can we make this opportunity a reality?
- Buy tokens on-site or using conversions (long-term trading).
- Sell an equal number of tokens in the form of a perpetual contract (short-term trading).
- Important: You must monitor the funding rate for your tokens. here.
- If you think financing rates will be negative for an extended period of time, close the deal.
For a step-by-step guide to basic trading of spot and perpetual contracts, see “2. See ‘Perpetual Swap Transactions and Spot Transactions’. article.
What is the profit potential?
can’t decide accurate The amount of profit for these transactions (depends on the funding rate, which changes every 8 hours), the funding rate for the mentioned contracts is much higher than what we are used to!
This means you can potentially earn more by raising money.
What should I consider?
- Entry and exit costs for both trades, namely transaction fees and slippage.
- There is execution risk when simultaneously trading spot contracts and perpetual contracts, especially during periods of high market volatility.
- You must have USDT (Tether) to purchase on site. Additional USDT is required as margin when trading perpetual contracts.
- Considering that the MATICUSDT perpetual contract can be traded with up to 20x leverage and the LINKUSDT perpetual contract with up to 33x leverage, there is a risk of liquidation. If the market price rises above the liquidation price, resulting in an unhedged spot position, your position may be liquidated. If you decide to use high leverage for your trading, you should monitor market conditions closely and fund your wallet to meet your margin requirements. Alternatively, you can choose to trade with 1x leverage to avoid liquidation risk.
Did you like the article? We also have other trading guides covering derivatives trading, technical analysis, bot trading, and more. You can study this material here.
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