How to Do Pairs Trades on Dexly

A pairs trade — also called a spread trade — is a position built from two legs at once: long one asset, short a related one. You are not betting that either asset rises or falls in isolation. You are betting on the relationship between them: that the long leg outperforms the short leg.

This is the core mechanic behind most thesis trades. Once you can balance two legs cleanly, you can express almost any relative-value view — one metal against another, a tech basket against an index, a strong asset against a weak one.

When two related assets both get pulled by the same market wave, that shared move shows up in both legs. Since one leg is long and the other short, the shared component largely nets out. What is left is the difference in how the two assets moved — the spread.

A pairs trade only makes sense if the two assets have a real relationship. Pairs generally come from one of three buckets:

The rule that makes or breaks a pairs trade: balance by notional (dollar exposure), never by the number of contracts. Two assets almost never share a price, so matching units quietly turns a spread into a directional bet.

Because Dexly holds every market in one self-custody account with shared collateral, both legs of a pair draw on the same margin and settle in the same place. Use cross margin so the two positions offset each other and free up capital.

• Use low leverage: A spread feels safe, which tempts oversizing. Liquidation on either leg breaks the hedge. Keep leverage low so both legs survive normal volatility.
• Enter close together: Open the long and the short within a short window so you are not left with a naked directional position between fills.
• Cross margin the pair: With cross margin, a gain on one leg supports the other, improving capital efficiency versus isolating each. See cross vs isolated margin.
• Track the spread, not the legs: Watch the ratio or difference between the two assets. That is your real position; the individual leg prices are noise.

Market-neutral is not risk-free. A pairs trade trades directional risk for a different, subtler set of risks.

• Funding on both legs: Each perp pays or earns funding. On a spread held for weeks, funding can dominate the P&L — check the rate on both sides before entering.
• Correlation breakdown: The relationship you are relying on can weaken or invert. If the two assets stop moving together, the hedge stops working.
• Liquidation risk: A sharp move against one leg can liquidate it, leaving the other leg naked and directional. Low leverage and cross margin reduce this.
• Execution slippage: Two legs mean two fills. In thin markets, slippage on either side eats into the spread you were trying to capture.
• Double the fees: You pay to open and close two positions, not one. The relative move has to clear that cost to be worth it.

Each of these applies the same notional-balanced mechanic to a different relationship:

Both legs, one account, shared collateral. Pick a relationship you have a view on, size each side by notional, and open the pair from the same trading view.