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.

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