Funding Rate: A Basic Guide for Perpetual Traders
Funding is designed to help keep perpetual futures prices aligned with spot prices.
A simplified interpretation:
- Positive funding: longs pay shorts.
- Negative funding: shorts pay longs.
- Near-zero funding: the payment between sides is relatively small.
The rate alone does not reveal whether a trade is profitable or whether price will rise or fall. It is best understood as one part of derivatives positioning.
#PerpetualFutures #FundingRate #CryptoBasics
Funding is designed to help keep perpetual futures prices aligned with spot prices.
A simplified interpretation:
- Positive funding: longs pay shorts.
- Negative funding: shorts pay longs.
- Near-zero funding: the payment between sides is relatively small.
The rate alone does not reveal whether a trade is profitable or whether price will rise or fall. It is best understood as one part of derivatives positioning.
#PerpetualFutures #FundingRate #CryptoBasics