tradingeducation

# 📘 Trading from Scratch – Day 8/90
# 💰 Funding Rate: What is it and why is it important in futures trading?
In the previous topics, we learned about Leverage, Margin Calls, and Liquidation—fundamental concepts for understanding how futures trading works. Now it’s time to learn about another important element: the Funding Rate.
Many people believe that the Funding Rate is a fee charged by the exchange. However, in reality, it is a mechanism designed to keep the price of perpetual contracts as close as possible to the Spot market price.

Every day I see traders making the same mistake.
Add RSI...
Wait for it to reach 70 or 30...
Then immediately buy or sell.
The result?
Most of them get trapped.
The problem isn't RSI.
The problem is how people use it.
After studying Smart Money Concepts (SMC), ICT, Price Action, and Market Structure, I realized that RSI was never designed to make trading decisions on its own.
RSI should confirm your analysis, not create it.
Step 1: Learn to Read Market Structure
Before looking at any indicator, ask yourself one question:
What is the market doing?
Is price creating:
✅ Higher Highs (HH)
✅ Higher Lows (HL)
Or...
❌ Lower Highs (LH)
❌ Lower Lows (LL)
This is called Market Structure.
It tells you who is in control.
If buyers keep creating Higher Highs and Higher Lows...
The trend is bullish.
If sellers keep creating Lower Highs and Lower Lows...
The trend is bearish.
Everything starts here.
Not with RSI.
Not with MACD.
Not with moving averages.
Market Structure always comes first.
Step 2: Forget the 70 & 30 Rule
This may surprise many traders...
I rarely care if RSI reaches 70 or 30.
Instead...
I compare RSI with important swing highs and swing lows.
This changes everything.
Bullish Example
Imagine Bitcoin creates a new Higher High.
Now compare the RSI with the previous Higher High.
Scenario A
Price makes a Higher High.
RSI also makes a Higher High.
Momentum confirms the move.
This increases the probability that buyers are still strong.
Scenario B
Price makes a Higher High.
But RSI fails to make a Higher High.
Momentum is becoming weaker.
This doesn't guarantee a reversal...
But it tells me that buyers are losing strength.
Now I become more careful instead of chasing the breakout.
Bearish Example
The same logic works in reverse.
Price makes a Lower Low.
If RSI also becomes weaker...
Sellers remain in control.
But if price makes a new Low while RSI becomes stronger...
It tells me bearish momentum is fading.
Now I start watching for signs of a possible reversal instead of blindly selling.
Timeframe Is Everything
Another mistake I see every day...
Most traders never leave the 5M or 15M chart.
This is dangerous.
Before taking any trade, ask yourself:
Where is price inside the Higher Timeframe?
If price is approaching a major 4H or Daily swing high, I immediately move to the higher timeframe.
Because that's where institutions usually make decisions.
The lower timeframe only tells me how price is moving.
The higher timeframe tells me where price is likely reacting.
When there is no important higher timeframe level nearby...
Then I use the lower timeframe for execution.
Context always comes before entries.
My Trading Framework
I keep my analysis simple.
1️⃣ Market Structure
Who controls the market?
2️⃣ Order Flow
Where is liquidity?
Where are Order Blocks?
Has liquidity already been swept?
3️⃣ RSI Confirmation
Is momentum supporting price...
Or warning me that the move is becoming weak?
Only when these three things align do I consider a trade.
Final Thoughts
Indicators don't make traders profitable.
Understanding price does.
Market Structure tells you the direction.
Order Flow tells you where Smart Money is active.
RSI tells you whether momentum agrees with the story.
Use RSI as confirmation—not as a signal.
Once you start reading the market this way, you'll stop reacting to every candle and start understanding what the market is actually doing.
That's when trading becomes much clearer.
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