📘 Introduction

If you’ve traded perpetual futures on Binance, you’ve probably come across something called the “funding fee” or “funding rate.”

It might seem confusing at first, but understanding this mechanism is essential to trading futures efficiently — and avoiding unexpected costs.

In this 2025 beginner-friendly guide, we’ll explain what a funding fee is, why it exists, when it's charged, and how it impacts your trades on Binance Futures.

💡 What Is a Funding Fee?

A funding fee is a periodic payment exchanged between traders who are long and short on a perpetual futures contract.

Unlike traditional futures, perpetual contracts never expire — so the funding fee keeps the contract price aligned with the real market price (spot price).

  • When the market is bullish, long traders pay short traders.

  • When bearish, short traders pay long traders.


You either pay or receive this fee depending on your position and the direction of the market.

🔁 Why Does the Funding Fee Exist?

Perpetual futures don’t have expiry dates. To keep their price close to the actual spot market, Binance uses a funding rate mechanism that incentivizes the balance between long and short positions.

  • If too many traders are long, funding turns positive → longs pay shorts.

  • If too many are short, funding turns negative → shorts pay longs.


This mechanism helps prevent price manipulation and ensures the futures price doesn’t drift too far from spot.

🕒 When Are Funding Fees Paid on Binance?

Funding fees on Binance Futures are settled every 8 hours, at these times:

  • 00:00 UTC

  • 08:00 UTC

  • 16:00 UTC

If you hold a position during the exact funding time, you’ll either pay or receive the fee depending on your position and the current funding rate.

⚠️Funding hours may vary.

📈 Positive vs Negative Funding – What’s the Difference?



"Comparison table showing Binance Futures funding rate types: positive funding where longs pay shorts in bullish markets, and negative funding where shorts pay longs in bearish markets."

This means funding rates can either be a cost or a bonus, depending on what side of the trade you’re on.

🧮 Funding Fee Formula (Example)

Formula:

Funding Fee = Position Size × Funding Rate

Example:

  • You hold a $10,000 long position

  • Funding rate = 0.01%

  • Then:
    → You pay $1 at funding time (10,000 x 0.0001)

    If funding were negative and you were long, you’d receive $1 instead.

🤔 Is Funding Fee Good or Bad?

It depends:

  • If you’re paying: It’s an added cost, especially with high leverage

  • If you’re receiving: It’s free money — but only if your position is profitable overall

  • In sideways markets: Funding fees can accumulate and eat into profits

📌 Tip: Some traders "funding farm" — opening positions just before funding times to collect fees.

📋 FAQ – Funding Fee on Binance

Q1: Do I always pay funding fees on Binance Futures?

A1: No. You only pay (or receive) the fee if you're holding a position at the funding time.

Q2: Can funding fee be avoided?

A2: Yes, by closing your position before the funding interval.

Q3: Where can I check the current funding rate on Binance?

A3: On each futures pair’s page, under "Funding/Rate History."

Q4: Is the funding fee charged from my margin?

A4: Yes. If you don’t have enough margin, it can increase liquidation risk.

🏁 Conclusion

Funding fees are a crucial part of perpetual futures trading on Binance.

They help balance the market, but they can also affect your profit — especially if ignored. By understanding when, why, and how funding works, you’ll be better equipped to manage your positions like a pro.

Whether you’re trading long or short — always check the funding rate and plan your entries accordingly.