The Spot vs Futures strategy is a trading method based on taking advantage of price differences between the Spot market and the Futures market. This strategy is often used to profit from funding, to reduce risks (Hedging), or to speculate on the price difference between the two markets.
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🧠 The main idea
Spot market:
It is the market where assets are bought or sold directly and delivered immediately.
The price is known as the "spot price."
Futures market:
Contracts are traded that represent a commitment to buy or sell a specific asset in the future at a specified price.
Includes funding fees that are calculated periodically.
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🎯 Ways to use the strategy
1. Profit from funding fees (Funding Arbitrage)
In the perpetual futures market (like Binance Futures), traders pay funding to each other based on market direction (Long vs Short).
Practical example:
If funding is positive: traders who open Long positions pay funding to the Short positions.
In this case, you can:
Buying the asset in the Spot market
Open a Short position in the futures market with the two positions and profit from the periodic funding fees
> ✅ Profits come from funding
🔒 Do not expose yourself to price risks because you are "market-neutral"
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2. Hedging
If you are a long-term investor in a specific asset on Spot and fear a temporary price drop:
You can open a Short position on Futures
If the price drops, Spot losses are compensated by Futures gains