What is Arbitrage Order Execution?
From a market perspective, irrational price fluctuations may create deviations from normal levels. The participation of arbitrage capital helps prices revert faster to equilibrium, generating low-risk profits during this correction process.
Arbitrage order execution involves traders simultaneously monitoring two markets to place coordinated orders that should ideally execute at the same time. This strategy captures fee differentials or price spreads, classified into:
- Fee Rate Arbitrage
Simultaneously executes offsetting trades (opposite directions, equal volume) in spot and perpetual contracts to profit from perpetual contract funding fees. Price Spread Arbitrage
- Futures-Spot Arbitrage: Exploits significant price gaps between futures contracts and spot markets by buying the undervalued side and selling the overvalued side.
- Futures-Futures Arbitrage: Trades contracts with different expiration dates. Note: Riskier than futures-spot arbitrage as price gaps may not fully converge.
👉 Master advanced arbitrage techniques with OKX
How to Execute Arbitrage Orders
Step 1: Access the Arbitrage Tool
- Open OKX App → Navigate to [Trading] → [Strategies] → [Portfolio Arbitrage] → [Arbitrage Order Execution]
Step 2: SOL Perpetual Contract Fee Rate Example
- Check the [Current Funding Rate] in the depth chart.
When positive, longs pay shorts. Execute:
- Short SOL perpetual contract
- Buy equivalent SOL spot to hedge price volatility
- Outcome: Profit equals the next funding fee settlement.
Step 3: Order Execution
- Set SOL perpetual contract details (price, quantity/amount)
- Enable "Two-leg Order" with execution condition:
"If either leg fully executes, the other leg triggers market order"
→ Ensures simultaneous execution with minimal slippage.
Post-execution:
- SOL spot holdings + perpetual short positions neutralize price movements.
- Monitor funding fee earnings under [Funds] → [Billings]
Note: Manually close positions (sell spot + exit short) to terminate arbitrage.
FAQ: Arbitrage Trading Explained
Q1: Is arbitrage risk-free?
A: While low-risk, execution timing and liquidity can impact results. Use OKX's deep liquidity pools for optimal fills.
Q2: How often do funding fees settle?
A: Typically every 8 hours. Monitor rates in real-time for strategic entries.
Q3: What instruments support arbitrage on OKX?
A: Major crypto pairs with active spot and perpetual/futures markets (BTC, ETH, SOL, etc.).
Q4: Can I automate arbitrage strategies?
A: Yes! Explore OKX's API for algorithmic trading integrations.