“One-click hedging” is essentially a perpetual contract capital fee arbitrage tool. When opening a position, you will short sell the perpetual contract at the amount you invested. The unique capital fee of perpetual contracts is our arbitrage room.
Specifically speaking, the capital fee of the perpetual contract is used to anchor the spot price, shortening the discrepancy of the contract and the spot prices. The rate of capital fee (funding rate) can be positive or negative, and the settlement will be every 8 hours starting from 00:00 (UTC+8). When the rate >0, the long pays the fee and the short gets it. When the funding rate<0, the long gets the fee and the short pays it. It should be noted that if the position is closed before the settlement time, no fee is going to be paid or received.
Bibox’s one-click hedging strategy arbitrages the perpetual contract capital fee when the rate is greater than 0. Currently, the one-click hedging strategy supports eight trading pairs which includes BTCUSD, ETHUSD, LTCUSD, LINKUSD, UNIUSD, DOTUSD, FILUSD, and BCHUSD. Before opening the one-click hedging strategy, users can go to the currency-based futures page, https://futures.bibox.com/v2/contract?pair=5ETH_USD , to obtain the respective rates (marked as green in the following pictures).
When the rate is positive and higher than rate of transaction fee, users can consider using one-click hedging. It should be noted that under the same other conditions, the trading pair with the highest rate is the optimal trading pair. However, users should also note that in a bull market, they need to ensure that there is enough balance for recharging the margin to prevent the contract from being liquidated.
In addition, the fund rate alternates frequently between positive and negative. Users need to pay attention to rate changes. When the rate is negative, consider stopping the one-click hedging, and wait for the fee to be positive and greater than the transaction fee to start the one-click hedging again. When the one-click hedging strategy is stopped, the system will close the current position at the optimal price and return your invested amount back to you.
One-click hedging is of low risk are suitable for risk-adverse investors with large capital. You can join Bibox bot trading group and discuss trading strategies with investors worldwide: https://t.me/bibox_trading_bot