Simple Three Steps: Earn 500% Annualized Returns with OKX Unified Account

LTC+3.39%

OKX Unified Account is dedicated to making trading simpler, offering four new account modes to meet different trading habits and needs. The emergence of the Unified Account system has not only led to a significant differentiation in trading forms, but also interconnected spot, futures, margin, and other accounts, greatly optimizing trading operations and leapfrogging user fund utilization efficiency. Huge arbitrage space and opportunities have also emerged from this.

This article demonstrates how, with a principal of 3000 USDT in Unified Account mode, you can profit 25 USDT in a single day through extremely low-risk arbitrage methods. If in live trading when the single funding rate reaches 0.2%, using 10000 USDT principal with 5x leverage for arbitrage, you can earn 150U daily at extremely low risk, with an annualized return rate exceeding 500%.

So how can you achieve ultra-high returns with extremely low risk? Let's find out.

1. Why Use OKX Unified Account for Arbitrage?

Currently, there are many arbitrage strategies commonly used in the market, such as funding rate arbitrage, basis arbitrage, calendar spread arbitrage, etc. Due to advantages like attractive returns and controllable risk, they have become a popular investment method.

Whatever arbitrage method you use, using OKX's Unified Account for arbitrage operations offers two major advantages:

1) The Unified Account allows you to select [Spot and Futures Mode] or [Multi-Currency Margin Mode], integrating spot, futures, margin, and other accounts, sharing one account, reducing transfers between accounts, simplifying operation steps, and improving product usability.

2) Margin is consolidated within one account, with all positions sharing the same margin, resulting in higher fund utilization efficiency and lower operational risk for daily trading and trading-based arbitrage.

The specific advantages of the Unified Account will be demonstrated in the examples.

In addition, arbitrage operations require monitoring two markets in real-time and ensuring simultaneous orders so that both orders can be executed with equal quantity/amount at the same time, minimizing risk from position value differences. OKX has also launched a strategy trading mode. Using arbitrage order tools can improve efficiency and execution accuracy during operations, maximizing the avoidance of arbitrage risk.

This article will introduce how to use OKX Unified Account for funding rate arbitrage.

2. Introduction to Funding Rate Arbitrage

1.Principle of Funding Rate Arbitrage

Perpetual contracts use spot prices as the trading index. To ensure the price difference between contract prices and spot prices, there is a unique pricing tool called "funding fee." It can be used to anchor spot prices. When at any moment the perpetual contract price deviates from the spot price beyond a reasonable spread, funding fees will force this deviation back to a reasonable level.

When the funding rate is positive, the perpetual contract price is higher than themark price. Therefore, long traders need to pay funding fees to short traders. Conversely, when the funding rate is negative, the perpetual contract price is lower than themark price, meaning short traders need to pay funding fees to long traders. Funding fees are charged according to the following rules:

Funding Fee= Position Value × Funding Rate (Funding fees are collected 3 times daily)

Based on the current and forecasted positive or negative funding rate, determine the direction of the perpetual contract, then execute two trades with opposite directions and equal quantities in both the perpetual and spot markets that offset each other's profit and loss, allowing you to earn returns from the funding rate.

In actual operations, to maximize fund utilization and earn more funding rate returns with less principal, you can use OKX Unified Account to leverage and amplify your principal.

2. Funding Rate Arbitrage Methods

① Perpetual Contract Combined with Spot Margin Arbitrage

This arbitrage method executes two trades simultaneously in the perpetual and spot margin markets with opposite directions, equal position sizes, and offsetting profit and loss. By setting leverage, you can achieve the same principal but expanded position size. When position size (position value) increases, the funding fee earned increases according to the formula above.

Note that spot margin trading incurs margin interest. Within the same period, arbitrage operations are profitable only when ensuring that funding fee returns exceed the margin interest to be paid. Additionally, opening and closing positions incurs trading fees. The return calculation for this method is:

Arbitrage Return = Funding Fee Return - Margin Interest - Trading Fee

② Perpetual Contract Combined with Futures Contract Arbitrage

Similarly, this arbitrage method still holds two trades, but the types are perpetual and futures contracts. Compared to spot margin, while futures contracts have no interest cost, they have delivery date limitations and require regular rollovers. The return calculation for this method is:

Arbitrage Return = Funding Fee Return - Trading Fee

3. Placing Arbitrage Orders with OKX Unified Account

1. Select Arbitrage Trading Pair

For arbitrage, you should select the coin with a higher perpetual contract funding rate. According to the formula above, when position values are equal, the higher the funding rate, the higher the funding fee that can be captured.OKX Perpetual Contract Funding Rate Comparison Query

In addition to manual queries, on the arbitrage order page you can directly filter officially recommended arbitrage combinations that match your arbitrage strategy.OKX Arbitrage Order Page

Furthermore, you can independently screen arbitrage combinations on the arbitrage data page. Click to jump to the arbitrage data page, or read "Real-time Arbitrage Signals Help You Complete Various Arbitrage Operations" to learn how to use this feature.

2.Using OKX Unified Account

If you want to use leverage to amplify your principal and earn more funding rate returns, you need to use OKX Unified Account.

Log in to OKX, and enable and select [Spot and Futures Mode] or [Multi-Currency Margin Mode] of the Unified Account according to your actual needs. This article uses single-currency margin mode as an example. On the trading settings page, you can also select and set trading units, order modes, etc.

3.Arbitrage Order Placement

This article selects LTC as the arbitrage coin to demonstrate the principles, operation steps, and annualized return rates of two arbitrage methods.

[Arbitrage Strategy 1] Perpetual Contract Combined with Spot Margin Arbitrage

Taking before 0:00 on April 15th, with a total principal of 3000 USDT in the Unified Account as an example, using the method of combining perpetual and spot margin for arbitrage to earn the spread between funding fees and interest. Specific operations are as follows:

① On LTCUSDT perpetual contract, sell to open a short position of 16 LTC at 3x leverage, position value 4280 U

② On LTC/USDT margin trading page, use USDT as margin to buy to open a long position of 16 LTC at 3x leverage, position value 4280 U

③ Regardless of market rise or fall, returns from both directional positions offset each other, principal loss risk is extremely low

④ Funding fees and margin interest are calculated and deducted hourly, return = position value × (daily funding rate - daily margin rate), return rate = return / principal

⑤ April 15th 0:00 funding rate 0.198%, daily funding rate 0.594%, daily margin rate 0.05%, single-day return approximately 4280 × (0.594% - 0.05%) = 23.3U, single-day return rate 0.78%, annualized return rate 285%

Note: Due to leverage tier limitations, you need to refer to these limitations to determine leverage and position size, ensuring operations are executable.

资金费套利1

[Arbitrage Strategy 2] Perpetual Contract Combined with Futures Contract Arbitrage

Taking before 0:00 on April 15th, with a total principal of 3000 USDT in the Unified Account as an example, using the method of combining perpetual and futures contracts for arbitrage to earn funding fees. Specific operations are as follows:

① On LTCUSDT perpetual contract, sell to open a short position of 16 LTC at 3x leverage, position value 4280 U

② On LTCUSDT weekly futures contract, buy to open a long position of 16 LTC at 3x leverage, position value 4280 U

③ Regardless of market rise or fall, returns from both directional positions offset each other, principal loss risk is extremely low

④ Funding fees are collected/distributed three times daily, return = position value × funding rate, return rate = return / principal

⑤ April 15th funding rate 0.198%, daily funding rate 0.594%, single-day return approximately 4280 × 0.594% = 25.4U, single-day return rate 0.85%, annualized return rate 310%

Note:

Since weekly futures contract prices are closer to perpetual contracts, to minimize spread, you should select the weekly futures contract. This means the delivery time is near and requires rollover before delivery.

Additionally, this arbitrage method carries the risk of losses from significant market volatility when opening or closing positions.

资金费套利2

4. Arbitrage Order Summary

Comparison of the two arbitrage strategies used:

套利策略对比png

1. Advantages of OKX Unified Account

For futures/margin trading with 3000 USDT principal, in the Unified Account you can share margin with other positions, maximizing the reduction of futures/margin trading risk. Additionally, in actual arbitrage operations, earned funding fees can continue to be used as margin for normal trading.

2. Advantages of OKX Arbitrage Strategy

When there is no extreme market condition, by selecting the "one leg fully executed, other leg market price executed" option in arbitrage orders, you can maximize the guarantee of simultaneous orders so that both orders can be executed at the same price level and equal quantity/amount, minimizing risk from factors such as spread and time difference.

3. Arbitrage Costs

Not all arbitrage is cost-free. In actual trading, there are potential costs from spreads when opening or closing positions.

If you choose margin arbitrage, you need to pay interest on the margin position (you can apply to become an OKX VIP to enjoy lower margin rates).
If you choose the method of combining futures and perpetual contracts for arbitrage, there are delivery time limitations and you need to roll over regularly.
In addition, opening and closing fees are also certain costs to be paid.

4. Arbitrage Risk

Perpetual contract funding rates are constantly changing, possibly switching between positive and negative, or changes in rate values. You need to regularly monitor rate changes and adjust strategies based on changes.

Additionally, you should also consider that when positions are large, opening and closing positions require time to be absorbed by the market, and costs may be affected by market movements.

5. Arbitrage Returns

In live trading, if calculated based on the average funding rate of trading pairs, when a single funding fee for a pair reaches 0.2%, by amplifying principal 5x through the Unified Account, you can achieve annualized returns of approximately 500%.

Based on historical funding rate data, funding rates are positive most of the time and are collected 3 times daily. If costs are controllable, this strategy can be used for long-term arbitrage.

5. Conclusion

All along, the potential returns of arbitrage have been greatly limited, but OKX Unified Account connects various accounts. This not only maximizes fund utilization efficiency and controls trading risk, but also greatly expands arbitrage space, providing greater operational scope for arbitrage users.

For investors using quantitative strategies, by enabling the portfolio margin mode, you can achieve risk hedging between cross-positions of all risk units. Some position combinations can achieve the effect of requiring less maintenance margin.

Due to market volatility and other factors, any trading strategy carries risk. Even for risk-free arbitrage, you cannot let your guard down. Investors should operate cautiously based on actual situations and pay attention to risk control. For the above arbitrage strategies, if you are unfamiliar with the operations, you can first use OKX demo trading to try arbitrage operations and experience the tremendous trading convenience and arbitrage space brought by OKX Unified Account and OKX strategy mode.

Appendix: OKX Margin Tier Query

OKX Margin Rate Query

OKX Perpetual Contract Funding Rate Comparison Query

Disclaimer

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1. Why Use OKX Unified Account for Arbitrage?

2. Introduction to Funding Rate Arbitrage

3. Placing Arbitrage Orders with OKX Unified Account

4. Arbitrage Order Summary

5. Conclusion