Funding Rate
Funding Rate
Funding rate is a periodic payment between traders in the perpetual futures market. Funding helps keep the futures price close to the spot price of the underlying asset.
How Funding Works
Positive rate (funding > 0):
Futures price is above spot price
Long traders pay short traders
Encourages closing longs and opening shorts
Negative rate (funding < 0):
Futures price is below spot price
Short traders pay long traders
Encourages closing shorts and opening longs
Zero rate (funding = 0):
Futures price equals spot price
No payments between traders
Calculation Examples
Positive Funding
Rate = 0.01%, long position of 10,000 USDT
You pay: 10,000 × 0.01% = 1 USDT
Negative Funding
Rate = -0.01%, long position of 10,000 USDT
You receive: 10,000 × 0.01% = 1 USDT
Payment Schedule
Schedule depends on the exchange and asset:
Payment frequency varies — most commonly every 8 hours, but intervals of 4 hours and even 2 hours also occur. Payment time and frequency are determined by the exchange and may differ for different trading instruments.
Important:
Funding is paid only if the position is open at the time of payment
If you close the position before payment — you neither pay nor receive funding
Debited/credited automatically
Always check the schedule for the specific exchange and asset
What Affects Funding Size
Price Difference:
Futures more expensive than spot → high positive funding
Futures cheaper than spot → high negative funding
Market Sentiment:
Bull market (growth) → funding is usually positive
Bear market (decline) → funding may be negative
Volatility:
High volatility → funding changes sharply
Low volatility → funding is stable, close to zero
How to Use Funding Information
For Short-Term Trading
High positive funding (0.1% or higher):
Expensive to hold longs, many traders in longs (possible overheating), potentially profitable to open shorts.
High negative funding (-0.1% or lower):
Expensive to hold shorts, many traders in shorts (possible overselling), potentially profitable to open longs.
For Medium-Term Positions
When holding for several days, consider accumulated funding (3 payments per day × number of days).
Example:
Funding = 0.05% every 8 hours
Per day: 0.05% × 3 = 0.15%
For 10 days: 1.5% of position size
Where to Check Funding in MoonTrader
In the "Markets Overview" tab:
"Funding Rate" column shows the current rate for each instrument
You can compare funding across different trading pairs
Convenient for choosing an instrument with funding considerations
On the chart:
There's an indicator to display the funding rate
Funding on exchanges:
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