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I have an interest in trading and quantitative finance...I don't do it myself, just read and think about it (but may like to move into the field in the future). Recently I have been reading a lot about derivatives. I have become aware that some platforms offer no fee derivatives trading and that made me think of a question...What kind of trading strategies that wouldn't work well on trading platforms with fees are facilitated by no fee futures trading platforms?
One obvious one is arbitrage strategies that have narrow margins (of course arbitrage still works on platforms that charge fees but obviously the fees reduce the viability of those strategies). For example, in the case of a perpetual futures contract, buying/selling a futures contract when the mark price has deviated from the price of the futures contract by plus or minus x% on the theory that over the next minute or two the price of the contract will move toward the mark price, at which point you close your position for a profit? This probably wouldn't work if you had to pay fees because even the larger deviations from the mark price are usually small...fees would eat up the profit. I haven't actually checked the probability that, when there is a relatively sizeable gap between the mark price and the price of a perpetual futures contract, the contract price will move toward the mark price, but there is typically very little volume at the prices in between, so I think it is a reasonable supposition.
What ideas do you have?
Can you help answer these questions from other members on NexusFi?
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While that's a great line of thinking as a rule you always pay a fee somewhere. If it's not an execution fee then your probably paying it in the bid-ask spread instead. With regards to perpetual bitcoin derivatives* versus bitcoin futures you need to consider both the credit risk, and the carry/funding rate being charged.
* while sounding sexy perpetual bitcoin swaps/derivatives/futures are basically the same as trading cash fx rather than actual futures.
^^This is important to understand. Also, if you're looking to dive into latency arbitrage you should know that most successful traders in this realm are exchange members (or at least leasing). This cuts down execution costs significantly and traders like this tend to be high-volume customers that get very competitive tiered commission structures.
They're also almost always colocated at CME in Aurora or Equinix (nearby in Chicago).
Use Promo Code FUTURES.IO for $0.45 futures commissions, $0.19 micro commissions HERE. *Promotion only available to new customers. Other fees such as exchange and NFA still apply*
Mike Murphy | Director of Trading
Ironbeam Futures
Phone: 312-765-7228 | [email protected]
If you trade bitcoin futures check out digitex futures, they are launching april 27th and are tailored towards scalpers as they are the only crypto exchange that has a Ladder/DOM interface. They have $0 commissions and the tick sizes are $5 on BTCUSD which provides a lot of liquidity on each tick.
No, it's a crypto exchange offering $0 commissions and they plan on adding equity index futures like the ES after they launch also with $0 commissions.