WHAT IS FUNDING RATE?
Funding rates are periodic payments between long and short traders in perpetual futures contracts. They keep the futures price anchored to the spot price.
POSITIVE RATE (+)
🟢 Longs pay shorts. Market is bullish. Consider opening short to earn funding.
Extreme: >0.1% → Very overbought market
NEGATIVE RATE (-)
🔴 Shorts pay longs. Market is bearish. Consider opening long to earn funding.
Extreme: >-0.1% → Very oversold market
BINANCE FUNDING SCHEDULE
Funding is paid every 8 hours: 00:00, 08:00, 16:00 UTC
Payment = Position Value × Funding Rate
Annual Rate = Funding Rate × 3 × 365
TRADING STRATEGIES
•
Funding Arbitrage: Long spot + Short futures to earn funding when rate is high
•
Rate Reversal: Extreme rates often revert — trade against the crowd
•
Cost Management: Reduce leverage when holding positions through multiple funding periods