Investors looking for returns on their trades should consider looking at the arbitrage options available on cryptocurrency exchange OKEx.
Following a post from Thomas Tse, Head of Quantitative Strategy at the Malta-based exchange, the team has demonstrated how using an arbitrage strategy can deliver a return on investment in just seven days.
Arbitrage opportunities are available on the spot margin trading interest rate and the perpetual swap trade funding rate.
In his report, Tse demonstrated how in a seven-day trading period he managed to generate a yield of 1.66 per cent return on investment.
He said: “With the offering of both spot, margin, and derivatives trading at one spot, OKEx provides users a world-class marketplace which opens the doors to a lot of arbitrage opportunities, saving you the hassle of withdrawing funds from a derivatives exchange to another spot trading platform, also the extra time and costs from blockchain transactions.”
In the post Tse outlined how he managed to get a return on investment of 575 Tron token (TRX) using an arbitrage strategy.
Explaining his strategy he said: “You borrow 1,000USDT-equivalent of TRX. Short 2/3 of it at spot margin trading (666.67 USDT). Then, transfer the remaining 1/3 to a perpetual swap account, open 66 swaps which is equal to 660USD. It is almost a delta-neutral strategy.”
New product, new success
The arbitrage is only possible at OKEx because the exchange offers both margin, and its new product Perpetual Swap.
Perpetual Swap launched in December last year, and since then has recorded $150 billion in cumulative trading volume.
On top of that, in June trading volume peaked at $4.5 billion, though more recently it was recorded at around $1 billion.
A spokesperson for OKEx, says the product, as well as allowing arbitrage opportunities, has been a big hit with their customers.
“We added Perpetual Swap to give our customers an extra trading option, and so far it’s doing very well. Not only does it allow for arbitrage strategies across assets, it allows users to place trades on future prices of assets, and to speculate whether they will rise or fall in value,” they said.
The spokesperson reminded traders that however experienced they were to investing, they must always know when to exit a trade, and have a damage mitigation plan in place to reduce any financial losses.