Let’s break it down like a pro trader 🧠📉📈
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1. The Basics of Funding Fees
In perpetual futures (like BNB/USDT), there’s no expiry date. To keep the contract price close to the spot price, exchanges use a system called the funding mechanism.
And that’s where the funding fee comes in!
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2. Who Pays Who? 🤔
• If the funding rate is positive:
Longs (buyers) pay shorts (sellers)
→ This usually means the market is bullish
• If the funding rate is negative:
Shorts pay longs
→ This usually means the market is bearish or cooling down
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3. How Often Is It Paid? ⏱️
Funding fees are usually paid every 8 hours (check your exchange settings).
You only pay or receive the fee if you hold a position at the exact funding time.
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4. Why It Matters for Your Trades ✅
• A positive rate discourages long positions when the market is overheated
• A negative rate discourages shorts during excessive bearishness
But smart traders use this info to read sentiment and plan entries!
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5. Pro Tip for Smart Traders
When funding is very negative, and the price is holding support, it might be a trap for shorts — and a bounce could be coming.
When funding is very positive, and price is struggling to push up, it might signal a bullish exhaustion.
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6. Real Example
Let’s say BNB has a funding rate of -0.04% — that means shorts are paying longs to hold positions.
If you’re shorting, you lose a tiny bit every 8 hours. But if price dumps, you still profit big — so always weigh the funding cost vs. price action!
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Understanding funding fees is a must for any futures trader!
It’s not just about the % you pay or get — it’s a window into the market’s mood.
Try this next time you trade 👇