Funding is an expense with your own capital
The trading fee is noticeable right away. Funding is easy to underestimate because it repeats while the position remains open.
For perpetual futures contracts, Binance describes the funding calculation every eight hours. If the rate is positive, long positions pay short positions; if it’s negative, vice versa. The rate can change, so today’s value does not guarantee the same cost tomorrow.
Before opening a position, I’d estimate:
• how many eight-hour intervals I plan to hold it for;
• who is currently paying funding;
• how the outcome changes if the rate increases;
• whether it would be cheaper to realize the idea using another instrument.
Price direction may be guessed correctly, but long holding and funding can still worsen the final result.
In a perpetual contract, time also has a cost.
#TradFi
The trading fee is noticeable right away. Funding is easy to underestimate because it repeats while the position remains open.
For perpetual futures contracts, Binance describes the funding calculation every eight hours. If the rate is positive, long positions pay short positions; if it’s negative, vice versa. The rate can change, so today’s value does not guarantee the same cost tomorrow.
Before opening a position, I’d estimate:
• how many eight-hour intervals I plan to hold it for;
• who is currently paying funding;
• how the outcome changes if the rate increases;
• whether it would be cheaper to realize the idea using another instrument.
Price direction may be guessed correctly, but long holding and funding can still worsen the final result.
In a perpetual contract, time also has a cost.
#TradFi