An open opportunity: how to manage it and when to close

7 min read · The "Positions" tab: executable spread, breakeven, result by leg.

Level:

Short version for experts: tables, lists and screenshots only.

Words in this lesson (14)

Short — Selling in the hope that the price will fall: you sell something borrowed, then buy it back cheaper. You make money when the price drops.

Stop — A price chosen in advance at which the trade is closed at a loss, so the loss doesn't grow bigger.

Spread — The difference between two prices. In the order book — between the best bid and the best ask. In arbitrage — between the price of the same asset on two venues.

Arbitrage — Making money on the price difference of the same thing in two places: buy where it's cheaper, sell where it's more expensive.

Opportunity (arbitrage pair) — A pair of trades in arbitrage: where we buy and where we sell.

Funding — A regular payment between those who are long and those who are short on a perpetual futures contract. Who pays depends on whether the futures price is above or below spot.

Spot — Ordinary buying and selling of the coin or stock itself: you buy it — it's yours.

Leverage — Money borrowed from the exchange. With 10x leverage, your $100 opens a $1,000 position: both profit and loss are ten times bigger.

Margin — Your own money that the exchange locks as collateral for a leveraged position.

Liquidation — The exchange force-closes a position when the loss has eaten all the collateral. The collateral is lost.

Order book — The list of all buy and sell orders at every price at this very second.

Volume — How much money or how many units changed hands over a period. A move on high volume is more reliable than one on low volume.

Fee — What you pay the exchange for every trade — both on entry and on exit.

Position — An open trade: what you have bought or sold and haven't closed yet.

What you see on the "Positions" tab

Opportunities live in the "Arbitrage" block at the bottom of the "Positions" tab (turned on with the "Blocks on the tab" checkbox). For each one MAMAY shows the result in real time.

Column	Meaning
Buy leg / sell leg	the exchange, the market and the current result of each leg
Margin	how much of your money is locked for the position
Leverage	the leverage the futures legs were opened with (spot is always unleveraged)
Notional	the total size of both legs
Entry prices	the average prices at which the legs were filled
Spread now / breakeven	the main column — see below
Funding	payments accumulated over the holding period
Net P&L	the total: both legs, funding and fees together

The legs on their own mean nothing

One leg is almost always in the red and the other in the green — that's how it should be, they move in opposite directions. Look only at the total (Net).

Executable spread and breakeven

This is the most important part.

Executable spread — the spread at which you can actually close right now: sell the buy leg at the bid and buy back the sell leg at the ask.
Breakeven — the spread value at which the total is zero, including all fees.

Executable spread below breakeven — closing in profit.

On the chart the spread is drawn from average prices and always looks "prettier" than the executable one — by the depth of the order book. So it can happen that the spread on the chart is already below your entry while the total is still negative. Go by the executable spread, not by the picture.

When to close

Decide this before entering and write it down:

Target. The spread has returned to its average (or to breakeven plus the profit you want) — close both legs.
Invalidation. The spread has widened beyond the agreed limit — close at a loss. Arbitrage has a stop too.
Time. If the spread hasn't converged within the allotted time and funding is going against you — exit.
Event. The exchange announced closed withdrawals or a coin delisting — exit without waiting.

Liquidation risk

A neutral opportunity can still lose one leg. The coin rose 40% — the futures short is deep in the red, and if there isn't enough margin on that exchange, the exchange force-closes the leg. The other leg is in profit at that moment, but on a different exchange — and it can't help.

Hence: small leverage and a reserve of free funds on every exchange.

↗ Open "Positions" in MAMAY