How exactly are funding fees calculated? A lot of people know how to open trades but don’t pay attention to funding fees. As a result, even when their trades are profitable, their profits keep shrinking. Let me explain it in plain English.
First, every contract market has funding fees. Some settle every hour, while others settle every 4 or 8 hours. You’ll see a countdown in the top-right corner.
When the funding rate is positive, if you’re holding a long position, you’ll have to pay traders holding short positions when settlement time arrives. Conversely, if you’re holding a short position, you’ll receive the payment.
When the funding rate is negative, if you’re holding a short position, you’ll have to pay traders holding long positions when settlement time arrives. Conversely, if you’re holding a long position, you’ll receive the payment.
How are funding fees calculated, and where are they deducted from?
Here’s an example: Suppose the funding rate for $UNITREE is currently -1%. You have a short position with 100 USDT in margin and 10x leverage. Your funding fee is 1% × 100 × 10 = 10 USDT. When settlement time arrives, 10 USDT will be deducted from your margin, leaving you with 90 USDT. Conversely, you’ll receive 10 USDT.
Can you avoid paying funding fees?
Yes. You can close your position before the settlement countdown ends—even at the very last second. As long as you’re not holding a position at settlement, you don’t have to pay a funding fee.
Likewise, if you open a position in the opposite direction at the very last second before settlement, you’ll be holding a position and can receive the funding fee.
First, every contract market has funding fees. Some settle every hour, while others settle every 4 or 8 hours. You’ll see a countdown in the top-right corner.
When the funding rate is positive, if you’re holding a long position, you’ll have to pay traders holding short positions when settlement time arrives. Conversely, if you’re holding a short position, you’ll receive the payment.
When the funding rate is negative, if you’re holding a short position, you’ll have to pay traders holding long positions when settlement time arrives. Conversely, if you’re holding a long position, you’ll receive the payment.
How are funding fees calculated, and where are they deducted from?
Here’s an example: Suppose the funding rate for $UNITREE is currently -1%. You have a short position with 100 USDT in margin and 10x leverage. Your funding fee is 1% × 100 × 10 = 10 USDT. When settlement time arrives, 10 USDT will be deducted from your margin, leaving you with 90 USDT. Conversely, you’ll receive 10 USDT.
Can you avoid paying funding fees?
Yes. You can close your position before the settlement countdown ends—even at the very last second. As long as you’re not holding a position at settlement, you don’t have to pay a funding fee.
Likewise, if you open a position in the opposite direction at the very last second before settlement, you’ll be holding a position and can receive the funding fee.