Let's explain it step by step for the smart trader 🧠📉📈
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1. Fundamentals: Why are there funding fees?
In perpetual contracts (like BNB/USDT), there is no expiration date for the contract.
To keep the contract price close to the spot price, exchanges use a mechanism called funding.
And here the role of funding fees appears!
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2. Who pays whom? 🤔
• If the funding rate is positive:
Long position holders pay Short position holders
→ And this usually happens in a bull market
• If the funding rate is negative:
Short position holders pay Long position holders
→ And this happens in a bearish market or after a rise calms down
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3. When are the fees paid? ⏱️
Funding fees are usually calculated every 8 hours (depending on the exchange's settings).
And if you have an open position at the moment of funding, you will either pay or receive the fees.
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4. Why is this important in your trading? ✅
• Positive rate: It reduces the enthusiasm for buying when the market is too hot
• Negative rate: It makes people think twice before selling in a very bearish market
Professionals use this data to understand market psychology and act intelligently!
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5. Advice for the smart trader
If the funding is very negative, and the price is maintaining strong support, there might be a trap for the Shorts — and a rebound soon.
And if the funding is very positive and the price is unable to rise, this could be upward stress.
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6. Practical example
If BNB has a funding rate of -0.04% — this means that sellers pay buyers.
If you open a Short position, you will pay a small amount every 8 hours, but if the price drops, you will profit — always think about the cost of funding versus price movement!
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Understanding funding fees not only saves you money, but also helps you read the market correctly!
Open the chart, follow the funding, and start analyzing market psychology!
Try this in your upcoming trades 👇
