How to Spot Arbitrage Opportunities and Avoid Risks

The Arbitrage and Risky Markets pages display, respectively, the highest high and the lowest low spread between the spot market and the futures market of a single coin.

In the article “Risks of Funding Rate Arbitrage”, we explained that although spot and futures represent the same asset, they are two different markets with different participants and price movements that are not always identical.

Understanding this concept allows us to:

• Identify markets where arbitrage opportunities exist and set an appropriate Take Profit in DegenWings.
• Determine which markets are best avoided.
• Define a suitable Stop Loss level for the markets we want to trade.

Let’s start by looking at a large and efficient market such as Bitcoin.

We can visualize the spread on TradingView by dividing the spot market by the futures market. In this case, open:

BYBIT:BTCUSDT / BYBIT:BTCUSDT.P

   
As you can see, because Bitcoin is a highly liquid and efficient market with many participants, the spread between spot and futures remains very close to 1 at all times.

Now let’s examine a market that currently appears in both the Arbitrage and Risky Markets lists.

On the Arbitrage page, MBOX shows that during the last six trading days on Bybit, the spot market outperformed the futures market by more than 2% every single day, with a peak spread of over 7% on June 14th.

   
We can verify this on TradingView using:

BYBIT:MBOXUSDT / BYBIT:MBOXUSDT.P

   
Compared to the Bitcoin chart shown earlier, it becomes immediately clear that spot and futures have not remained stable relative to each other in recent days. This instability creates profit opportunities that can be exploited using DegenWings.

Looking at this chart, it may be worth opening a delta-neutral position on MBOX with the sole objective of capturing one of these spread spikes through the Take Profit feature available in the bot settings.

As you can see, on June 15th there was a sharp downward spike, meaning that the futures market temporarily outperformed the spot market.

This movement was detected by DegenWings, which is why MBOX also appears in the Risky Markets list.

The presence of a market in the Risky Markets list does not automatically mean it should be avoided.

However, it does indicate that the coin is volatile, and your Stop Loss should be calibrated accordingly.

It is also important to evaluate the risk-to-reward ratio.

In the example we are analyzing, MBOX recorded a maximum spot-futures spread of approximately 7% and a minimum spread of around 2%.

The risk-to-reward profile is therefore favorable, making it a candidate not only for collecting funding rates but also for generating additional profits through arbitrage opportunities.

We should always remember that these pages are based on historical market behavior and cannot predict future movements.

However, they provide valuable insight into which markets are currently hot and worth monitoring, helping us decide where to focus our trading activity—or which markets to avoid in order to reduce unnecessary risk.