🤫What is a funding fee?
It’s a small fee that traders on perpetual futures pay each other every 8 hours (usually).
Why does it exist?
To make sure the futures price stays close to the real (spot) price of the coin.
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Now, the key part:
• If the futures price is above the spot price, longs are too aggressive.
Longs pay shorts to balance the market.
This is called positive funding.
• If the futures price is below the spot price, shorts are more aggressive.
Shorts pay longs to fix the gap.
This is called negative funding.
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Easy way to remember:
• Funding = market balance fee
• Positive funding = longs pay
• Negative funding = shorts pay
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Why does this matter to you?
If you’re holding a position for hours, this fee can eat into (or boost) your profit.
