What are the risks of arbitrage
A hedged position cancels most price moves. The risks that remain come from liquidation, funding reversal, one leg filling without the other, and funds sitting on two exchanges. This page explains when each one appears and what you can do at that point.
Liquidation
Each perpetual leg holds its own margin. In a sharp move, the losing leg can face liquidation while the gain sits on another exchange and cannot cover it. Once one leg is closed out, the other is a one-sided position.
When you set leverage and size: the higher the leverage, the smaller the liquidation distance. In ZML Trade, set pause-opening line, alert line and liquidation guard line for the combo. Risk controls explains each line.
Funding reversal
The funding rate changes every period. When the funding diff narrows or reverses, the position pays the funding fee instead of receiving it.
Before you open: look beyond the current net funding. Also check Positive periods and Last 7 days, cumulative: they show whether the funding diff has held. See How often funding settles and how to annualize it.
While you hold: set a Funding fee paid alert in ZML Trade. It notifies you when net funding becomes a cost of the size you set. The alert only notifies and never closes the position.
One leg fills alone
If one leg fills and the other does not, the position carries directional exposure until the leg gap closes. This happens more often with post-only orders: when the price moves away from a resting order, it does not fill.
When you choose an order type: Market fills fast and pays the taker fee and slippage. Post-only pays the maker fee and may not fill. Post-only, catch up at market lets a lagging leg close the leg gap at market.
Withdrawals and transfers
Funds sit on two exchanges. When one side runs short of margin, the gain on the other side has to be withdrawn and arrive before it can help, and that takes time. An exchange can also halt withdrawals, suffer an API outage or delist a market.
Before you open: leave spare margin in both accounts.
While you hold: watch for delisting and maintenance notices on both legs’ markets. Z Market Lab attaches verified delisting notices to each opportunity they affect. If a market on either leg is going to be delisted, close early.
The cost of protective actions
Both liquidation guard and automatic alignment trade at market, so they pay slippage and fees and may fill at a loss. Automatic alignment acts when the exchange holds less than the combo position (for example after a liquidation, an ADL or a manual close): it lowers the combo position and reduces to rebalance. It only reduces, never adds, and it cannot prevent a liquidation or ADL.