Why are there sometimes big difference between spot trading and futures?

xSkylarx

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Quote from: Oshosondy on February 14, 2023, 02:57:48 AM

Quote from: pixie85 on February 13, 2023, 03:57:05 PM

Because futures trading is a scam. You're doing virtual trading where your gain or loss depends on the index, not the real price of a coin and you don't own the coin at any moment.

No matter how long your explanation is, know that future trading is not a scam. Anyone that is scammed do not know someone has intention to scam him or her, the person do not know what is going on underneath. In future trading, everything is well explained and you know what you are going and how risky it is.

The positive aspect of futures trading is that even if you don't have that much money to trade, you can still trade and have a chance to earn a profit. I think he is really a lover of spot trading, which I respect. We do have our own point of view on things, so if he thinks spot trading is a scam, let him be, and we just continue in our trading. I would say that it is some sort of old-fashioned way of doing spot trading, and the future is a new trend, but I do them both, and I don't have anything against them as long as we earn profit from them.

adaseb

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You will not be able to make any money with arbitrage trading, not in 2023. You could of made some decent money back in 2015 or so when the exchanges weren’t that advanced and you had some basic programming skills and could manage API then it would of worked.

These days forget it. There are bots which are a lot faster than you and they got a closer location to the server and will front run many trades including arbitrage.

Hamza2424

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The primary reason for that in my view is the Volume difference between the Spot and Future markets. One more thing here is the fundamental difference between both of the markets where in the spot market the value of the asset is based on the demand and supply in circulation while in the future market, the market price is based on the time value of the asset as in future the demand and supply of the asset in upcoming time are used. Still dear it might be due to the platform you are using for the trading it may have some bugs which cause price fluctuation between pairs.

Maximum times the minor differences are due to the Volume.

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Quote from: blockman on February 13, 2023, 06:15:52 PM

Quote from: Synchronice on February 13, 2023, 08:58:18 AM

I know what's arbitrage trading but my main point here is whether it's legal to do or not. For example, if I do it with big money, will it turn a red alarm on Binance and Coinbase? Will they consider my actions suspicious and block my account? I want to get answer from those who have actually tried it and are confident in their response.

No, as long as you go with the normal process. There's really no worry about these exchanges if you do arbitrage. If ever you see an opportunity like this, the question is how long you'll be able to do it. Because at most times, the arbitrage opportunities are no longer there and are hard to find. They won't flag you for doing such as it's been there being normal even before. You may try to see on how your exchange(Binance) will react on it but to say that, they wouldn't really care at all.

Arbitrage trading is simply same thing as normal trading, it is not a crime nor does any crypto exchange ban users from carrying out arbitrage trading, Arbitrage trading very much easier to find within coins that are still pretty new to the market and haven't gathered or gained good 24 hour trading volume, this are the type of coins that easily experience prices differences on different exchanges where its been traded, but one must always be very careful in carrying out an Arbitrage trading, as most times, it always turns out to be a trap, as sometimes, before you could process withdrawal from first exchange to the second, you discover that price have become the same, or another scenario is after moving the fund to the second exchange to sell since the price higher there, you discover there is actually no liquidity to sell at that price, and you end up either paying another fees to withdraw back or selling at a price that is much lower.

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Quote from: Franctoshi on February 14, 2023, 04:11:49 PM

Quote from: pixie85 on February 13, 2023, 03:57:05 PM

Because futures trading is a scam. You're doing virtual trading where your gain or loss depends on the index, not the real price of a coin and you don't own the coin at any moment.
Futures prices are so disconnected from reality because they aren't real. Stay away from it.

Lolz Futures trading isn't a scam bro, I was feeling exactly the same as you do at some point, when I don't know anything about trading and what is really going on with the chart, it a game, until you got to understand how it's being played you won't profit from trading. And basically trading is not meant for everyone, when you can't decode or catch up with it , leave it and move on to other things.

That is just it, trading is not a scam. What is scam? A way to collect something valuable from someone in a way you do not give the person what he is expecting in retured. Trading is never like that, the exchange you use to trade give you terms and conditions to follow, they gain from trading fee, not that if traders lose they will gain the money, it is traders that lost money and it is also traders that gain the money lost by the traders. There is no scam about trading at all.

savetheFORUM

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Quote from: Synchronice on February 12, 2023, 05:45:31 AM

I know centralized exchanges aren't favorable choices but compared to other ones, I prefer to use Binance.
So, Skale Network (SKL) become an interesting coin for me recently. I usually bet on futures when I want 2x or higher leverage. I was looking at charts and SKL price on Binance Spot trading was 0.069 while the price of exact coin on USD-M futures was 0.06 USDT. Usually, prices are almost identical when I look at both chart but this time it wasn't different. I talk the situation that happened 2 days ago. Date: 2023-02-10 19:00 UTC. The price didn't increase during that day on Futures.
Anyone knows what's the reason behind it? I'm not too much experienced in trading. Why was there a 15% difference in prices on the same exchange between spot and futures?

The smaller coins do not have the volume to make it exactly the same. If you look at binance and what their rate is for bitcoin/busd trading pair both in spot and in futures, you will see that it is as close to each other as possible and that's a good reason to trade that.

However, if you are trading, Skale or whatever that is, which I have never heard before, it would be normal to have some differences because we are talking about a coin or a token whatever that is, which doesn't have the same amount of volume, so those are two different markets, and will have two different prices, while someone may buy in bulk and increase one, others may not do the same for the other one and the difference will happen.

dansus021

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The others have already told the reason I just want to add more You will notice a jump or difference from the spot market when the funding rate countdown is near to end -20 minutes usually. The price of the future market will differ from spot market and usually against the funding rate if the funding rate is positive the price is down for a minute or vice versa there are some people that get benefit from it.

and in the other futures market i don't remember it you can actually buy dozen of contract and of course need a lot of money and kinda made a manipulation on candle

ultrloa

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Aside from many good points posted by other member here are simplified thing you need to know or consider between spot and futures trading.

Spot trade if you lose you can still hodl it and wait for recovery then sell you will get less worried for this especially when you bought the top coins since they are good once market cycle turns to bullish.

Futures trade if market became bullish or bearish your position have a a chance to get liquidated and its an instant lose then your only chance to recover is to deposit a new amount and trade back again.

el kaka22

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I have to agree with everyone and say the risk, that is the biggest difference between them. But, if we want to talk something a bit more fresh, I cold say that the knowledge as well, because spot trading is easier and requires less knowledge whereas futures require a lot more intricate and sensitive information that you need to master, it is not that easy.

If you are a master at it, doing it may sound and look easy for you because you already know it, but for a newbie those same things would look daunting and scary to learn at first, plus the fact that your money depends on how well you learned makes it even tougher and that is why it is so much more difficult.

tjtonmoy

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Quote from: Synchronice on February 12, 2023, 05:45:31 AM

And another question:
At the same time, coinbase had way better rates than Binance. Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

I don't see why not. It is pretty much legal as it is. There will be no reason for it being illegal. If they are giving you same thing in different value, why not? This is how business works and there's nothing wrong with it. I guess it will be profitable if you are buying in bulk or in big amount. Otherwise the profit is too low to put in the effort.
I haven't done it so do your own research before doing it tho. I will not be responsible for anything. It's up to you to decide.

pixie85

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Quote from: Franctoshi on February 14, 2023, 04:11:49 PM

Lolz Futures trading isn't a scam bro, I was feeling exactly the same as you do at some point, when I don't know anything about trading and what is really going on with the chart, it a game, until you got to understand how it's being played you won't profit from trading. And basically trading is not meant for everyone, when you can't decode or catch up with it , leave it and move on to other things.

It's important to realize the difference between trading, which is not a scam, futures, which again is not a bad concept in traditional commodity trading, and bitcoin futures.

I said it a number of times already and usually every person who answered me did that by saying that I don't understand futures trading because I don't understand trading or that bitcoin futures trading can't be a scam because commodity futures trading is not.

Traditional concept of futures trading doesn't apply to bitcoin and someone who is trying to make it work is doing so to curb the bitcoin market, allow people to have fake exposure by making it look like it's difficult to buy and hold bitcoin, like physical oil or gold, which is a lie.

It's my opinion that if you want to trade bitcoin, don't trade a fake substitute.

Altryist

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Quote from: ShowOff on February 14, 2023, 09:37:55 PM

Arbitrase is sometimes also profitable and can even be loss. There are traders who do it only between trusted exchanges and there are also between exchanges that are not very reputable. A common problem that often occurs with this trading strategy is that traders don't get a decent profit compared to the risk. The small price difference makes the profits just cover trading and withdrawal fees, and it's just a waste to do.

Traders must really understand the risks of this trading strategy so that they should not only aim for profits while there are bigger risks waiting for them. A few months ago one of my trader "friends of mine" had a problem not being able to withdraw his funds from the exchange after arbitrage, it was unreliable and they ended up losing $3000 on that incident after finding out that the exchange he was using was having problems.

In arbitration as an activity, I see only risks. I don’t argue, sometimes it happens that we see a good opportunity and want to take advantage of it, but you need to remember that free cheese is only in a mousetrap, and before you rush to make these transactions, you need to find out why this coin is more expensive or cheaper on another exchange. There can be many reasons, ranging from the delisting of this coin (which can cause big losses), to problems with the exchange, when the funds can simply be blocked, as in the case you mentioned.

ShowOff

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Quote from: yhiaali3 on February 14, 2023, 09:22:17 PM

Quote from: Synchronice on February 13, 2023, 08:58:18 AM

I know what's arbitrage trading but my main point here is whether it's legal to do or not. For example, if I do it with big money, will it turn a red alarm on Binance and Coinbase? Will they consider my actions suspicious and block my account? I want to get answer from those who have actually tried it and are confident in their response.

Yes it is legal as far as I know, this helps to "bridging price gaps" between different exchanges, I've tried it before so you won't get a red alarm from the exchange or your account gets blocked.

But most of the time, when exchanges pay attention to these price differences, withdrawals and deposits are closed for the coins in which there are price differences, so you will not be able to take it out of the exchange.

But if the differences are not large enough, the exchanges will not care about them, but on the contrary, they benefit from the withdrawal and deposit fees on those coins.

Arbitrase is sometimes also profitable and can even be loss. There are traders who do it only between trusted exchanges and there are also between exchanges that are not very reputable. A common problem that often occurs with this trading strategy is that traders don't get a decent profit compared to the risk. The small price difference makes the profits just cover trading and withdrawal fees, and it's just a waste to do.

Traders must really understand the risks of this trading strategy so that they should not only aim for profits while there are bigger risks waiting for them. A few months ago one of my trader "friends of mine" had a problem not being able to withdraw his funds from the exchange after arbitrage, it was unreliable and they ended up losing $3000 on that incident after finding out that the exchange he was using was having problems.

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Quote from: Synchronice on February 13, 2023, 08:58:18 AM

I know what's arbitrage trading but my main point here is whether it's legal to do or not. For example, if I do it with big money, will it turn a red alarm on Binance and Coinbase? Will they consider my actions suspicious and block my account? I want to get answer from those who have actually tried it and are confident in their response.

Yes it is legal as far as I know, this helps to "bridging price gaps" between different exchanges, I've tried it before so you won't get a red alarm from the exchange or your account gets blocked.

But most of the time, when exchanges pay attention to these price differences, withdrawals and deposits are closed for the coins in which there are price differences, so you will not be able to take it out of the exchange.

But if the differences are not large enough, the exchanges will not care about them, but on the contrary, they benefit from the withdrawal and deposit fees on those coins.

sheenshane

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Quote from: Synchronice on February 12, 2023, 05:45:31 AM

And another question:
At the same time, coinbase had way better rates than Binance. Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

IMO, there's no problem with this as long as both exchanges that you've used were KYCed verified.
But the disadvantage of this might you will face high fees for transactions for transferring your funds on these exchanges.

There are too many disadvantages if you're in future trading, first, take consider choosing a legitimate exchange where to entrust your fund and the second one is the risks and speculators possibly can lose even their initial margin because of future use leverage.

Franctoshi

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Quote from: pixie85 on February 13, 2023, 03:57:05 PM

Because futures trading is a scam. You're doing virtual trading where your gain or loss depends on the index, not the real price of a coin and you don't own the coin at any moment.
Futures prices are so disconnected from reality because they aren't real. Stay away from it.

Lolz Futures trading isn't a scam bro, I was feeling exactly the same as you do at some point, when I don't know anything about trading and what is really going on with the chart, it a game, until you got to understand how it's being played you won't profit from trading. And basically trading is not meant for everyone, when you can't decode or catch up with it , leave it and move on to other things.

pixie85

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Quote from: Bitcoin_Arena on February 13, 2023, 06:50:00 PM

Virtual trading? Grin

Traders are literally using their real funds as collateral, and you call it virtual trading? Lol

If you got burned trading derivatives before, it shouldn't be a basis you use to call it a scam. Just know that on that day, someone on the other side made profit out of you

If you're betting fiat money on bitcoin without buying said bitcoin, you're involved in virtual trading.
Ask yourself a simple question. If you can short or long bitcoin, with leverage if that's your thing, why would you choose to buy a virtual contract that follows the price of bitcoin instead of the real thing?

Quote

Stick to buying and selling physical commodities, then. Like barrels of crude oil, I bet it will be very convenient for you.

Thanks for your advice, but I'll simply stick to buying bitcoin. It's much more convenient than buying bitcoin futures.
Sure oil or copper contracts exist because most of us don't have a way to store large quantities of these materials. This doesn't apply to bitcoin though. It's very easy to store and move around.

Oshosondy

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Quote from: pixie85 on February 13, 2023, 03:57:05 PM

Because futures trading is a scam. You're doing virtual trading where your gain or loss depends on the index, not the real price of a coin and you don't own the coin at any moment.

No matter how long your explanation is, know that future trading is not a scam. Anyone that is scammed do not know someone has intention to scam him or her, the person do not know what is going on underneath. In future trading, everything is well explained and you know what you are going and how risky it is.

Franctoshi

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In addition to what others have said so far, from what I have experienced ,Volatility is one of the things that usually causes this difference in the price between the spot and future contracts , basically this occurs mostly in the future contact side, either it's lower or higher than the actual spot price as a result that smart money players are hunting for stops in order to liquidate retail traders in a buying or selling market in the future contract side and hence cause this price difference.

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Quote from: Synchronice on February 12, 2023, 05:45:31 AM

Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

It is legal but subject to your daily/weekly/monthly withdraw or deposit limits. All the above, if you do like you have mentioned, did you calculate how long such price differences will exist? In most cases, if you buy/sell in large quantity then prices in both the exchanges will converge as early as possible. When the price gap is not significant or not enough for covering for the fees to pay for placing orders (buy and sell), withdrawing from an exchange and network tx fees then there will be no point of planning for buying in one exchange and selling in other exchange in larger quantity.

When something like this is not feasible in large quantity, most people do not like to go for it in even in small quality as well due to the hassles involved in moving funds from one exchange to another. Probably you may try for it in small quantity if you have funds initially in both of the exchanges initially (to save time by not waiting for network confirmation before gaps disappear) and if you are KYC verified (for ensuring not getting locked while withdrawing).

Topic: Why are there sometimes big difference between spot trading and futures? (Read 203 times)