Funding rate is rent.
Perps never expire, so every few hours one side pays the other to keep price near spot. Crowd is long, longs pay shorts. Crowd is short, the other way round. The exchange keeps none of it.
The part most people miss: it's charged on your whole position, not your margin. $10,000 of margin at 10x pays $10 every 8 hours, even at 0.01%.
And when everyone piles onto one side, the rent spikes. On 26 Sep, $RARE shorts on Binance were paying 0.52% every 4 hours.
Do you check funding before you open a trade?
Not financial advice.
Perps never expire, so every few hours one side pays the other to keep price near spot. Crowd is long, longs pay shorts. Crowd is short, the other way round. The exchange keeps none of it.
The part most people miss: it's charged on your whole position, not your margin. $10,000 of margin at 10x pays $10 every 8 hours, even at 0.01%.
And when everyone piles onto one side, the rent spikes. On 26 Sep, $RARE shorts on Binance were paying 0.52% every 4 hours.
Do you check funding before you open a trade?
Not financial advice.