TL;DR

• Open the Binance app and tap "Trade"
• Tap "Bots"
• Tap "Arbitrage Bot"
• Choose the coin to trade
• Enter the amount, sign the disclaimer, and confirm
• Choose leverage type and open a futures account
• Tap "Create", then "Confirm"
• Bot executes trade automatically

Video Tutorial

 

 

• How arbitrage bots operate
• Using a Binance arbitrage bot

How Arbitrage Bots Operate

Arbitrage in cryptocurrency trading often revolves around maintaining price balance. Futures prices can diverge from spot prices, leading to the introduction of a funding rate. This rate is a mechanism to incentivize traders to take positions that bring futures and spot prices closer together:

1. When Futures Prices Are Lower: Short sellers compensate long sellers by paying the funding rate. This encourages buying and helps bring the prices closer.
2. When Futures Prices Are Higher: Long sellers compensate short sellers by paying the funding rate. This motivates selling to balance the prices.

To profit from these funding rates without taking on directional market risk, a delta-neutral strategy is used. This means that if you want to deposit $1000 worth of BTC into the arbitrage bot, you should allocate $500 to BTC long positions and $500 to BTC short positions. This way, you cover yourself whether the price drops or rises, maintaining a neutral position. You can easily protect yourself against price fluctuations while earning from the funding rate.

Although this type of arbitrage has minimal risk, you must be aware that the funding rate can sometimes change and become negative. While this is uncommon in bull markets, it’s still something to consider.

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Using A Binance Arbitrage Bot

Now that you understand the basics, here's what you need to do.

• Open your Binance app and tap on the "Trade" option.

 

 

• Tap on the "Bots" option.

 

 

• Now, tap on the "Arbitrage Bot" option.

 

 

• Choose the coin to trade for.

 

 

• Enter the amount and tap on the "Sign Disclaimer" button. Tap on the checkbox and then the "Confirm" button.

 

 

• Choose the leverage type. Choose the "Beginners" option and tap on the "Open Futures Accounts" button.

 

 

• After that, tap on the "Create" button and then the "Confirm" button.

 

 

After going through the entire process, the bot will perform a trade for you.

Wrapping Up

Using a Binance arbitrage bot is a simple way to take advantage of price differences and funding rates in futures trading. By following the steps provided, you can set up the bot to keep a balanced position and reduce your risk from price changes.

While this method is generally low-risk, it’s important to be aware that funding rates can sometimes change and work against you. With the bot properly set up and a good understanding of how arbitrage works, you can earn steady returns with less worry about market movements.

Now, you’re ready to try a Binance arbitrage bot to make your trading easier. However, staying up-to-date on the status of your preferred crypto can be a bit challenging. That's why Cryptonary now has a free trial where you can take advantage of all the premium features without having to worry about anything. We also have a huge library of guides and tutorials that you can learn from completely free of cost.