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What Is the Concept of “Basis Trading” in Perpetual Futures?

Basis trading involves simultaneously taking a position in the perpetual futures contract and an opposite position in the underlying spot asset. The goal is to profit from the convergence of the futures price to the spot price.

In perpetuals, this convergence is primarily driven by the funding rate. A trader buys the cheaper asset and shorts the more expensive one, capturing the basis as profit.

What Is a “Cash-and-Carry” Trade in This Context?
How Does the Funding Rate Mechanism Work to Keep Perpetual Futures Prices Close to the Spot Price?
How Can a Trader Use a Negative Funding Rate to Execute a ‘Cash and Carry’ Arbitrage Strategy?
How Do Arbitrageurs Utilize the Funding Rate Mechanism?