Funding rates on perpetual futures, explained
A perpetual future has no expiry date, so something must keep its price close to the spot price. That something is the funding rate: a small payment between longs and shorts every few hours. It is a cost or an income for your trade, and a window on how the crowd is positioned.
What funding is
At fixed times, usually every 8 hours (some markets every 4 hours or every hour), traders holding a position pay or receive funding. The exchange does not keep it: it moves between the two sides.
- Positive rate: the perpetual trades above spot. Longs pay shorts.
- Negative rate: the perpetual trades below spot. Shorts pay longs.
You only pay or receive if you hold a position at the funding time. A trade opened and closed between two funding times pays none.
How much it costs
Funding payment = position value × funding rate
The position value is the full leveraged size, not your margin. A rate of 0.01 % per 8 hours looks tiny, but it is paid three times a day: 0.03 % a day, about 0.9 % a month and about 11 % a year of the position. At 10× leverage that is about 110 % of your margin per year. When the market is very one-sided, rates of 0.05 % to 0.1 % per period are not rare, and holding against them for weeks becomes expensive. The funding rate calculator turns a rate into a cost per day, month and year.
What funding tells you (and what it does not)
A high positive rate means many traders are long with leverage and are willing to pay to stay long. A deeply negative rate means the crowd is short. Extremes show a crowded trade, which can unwind quickly when price moves against it.
It is not a timing signal on its own. Funding can stay high through a long rally. Use it like the COT report in traditional markets: as context about positioning, combined with your own levels and risk plan, never as a reason to enter by itself.
Funding versus swaps on CFDs
Crypto CFDs at forex brokers have no funding; instead the broker charges a daily swap (overnight financing) on positions held past the rollover time, often for both longs and shorts, and sometimes three times on one day of the week to cover the weekend. Check the swap values in your platform's symbol specification before holding a CFD for days.
Worked example
You hold a 20,000 USDT long (2,000 USDT margin at 10×) for 5 days while funding is 0.02 % every 8 hours. Each payment is 20,000 × 0.0002 = 4 USDT; 15 payments cost 60 USDT, or 3 % of your margin. If the rate turns to −0.01 %, the same long receives 2 USDT per period.
Tools for this guide
Questions
How often is funding paid?
Usually every 8 hours, at fixed times shown on the contract page; some markets pay every 4 hours or every hour, and the interval can change in volatile periods.
Do I pay funding on spot?
No. Funding exists only on perpetual futures. Spot has trading fees only; CFDs have swaps instead.
Is a high funding rate bullish?
It shows that many traders are long with leverage. That can continue for a while, but crowded positions also unwind fast. Treat it as context, not as a signal.
Is funding calculated on my margin?
No, on the full position value. That is why funding matters more the higher your leverage.
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