#formation
formation
632 views
7 Discussing
Hot
Latest
Daily Term: FUNDING RATE (Financing Rate)
The funding rate is a mechanism specific to perpetual futures contracts. It is used to keep the contract price close to the underlying asset’s real price (spot).
How does it work?
If the funding rate is positive, traders holding long positions pay the sellers (shorts). If it’s negative, it’s the opposite.
Concrete example:
You open a long position on BTC/USDT perpetual. The funding rate is +0.01% every 8 hours. Over 24 hours, you pay 0.03% of your position. For 1,000 USDT = 0.30 USDT in fees.
Why is it important?
A very high funding rate = an overbought market = risk of a correction. It’s a very useful sentiment indicator for traders.
On Binance Futures, the funding rate is shown in real time for each trading pair. Keep an eye on it before opening a position!
#Crypto #BinanceSquare #Formation #FundingRate #Debutant
The funding rate is a mechanism specific to perpetual futures contracts. It is used to keep the contract price close to the underlying asset’s real price (spot).
How does it work?
If the funding rate is positive, traders holding long positions pay the sellers (shorts). If it’s negative, it’s the opposite.
Concrete example:
You open a long position on BTC/USDT perpetual. The funding rate is +0.01% every 8 hours. Over 24 hours, you pay 0.03% of your position. For 1,000 USDT = 0.30 USDT in fees.
Why is it important?
A very high funding rate = an overbought market = risk of a correction. It’s a very useful sentiment indicator for traders.
On Binance Futures, the funding rate is shown in real time for each trading pair. Keep an eye on it before opening a position!
#Crypto #BinanceSquare #Formation #FundingRate #Debutant
Log in to explore more content