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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