A Simplified Guide to the Valuable Funding Fee: Newbies Shouldn't Force It; This is a Thorny Arbitrage Trap
I. The Essence of Funding Fee (Understand in 30 Seconds)
Long-Short Balance Tax: Contracts settle every 4-8 hours, and longs/shorts pay fees to each other based on the nominal value of their positions (Principal × Leverage).
Formula: Funding Fee = Nominal Value of Position × Funding Rate (Positive rate means longs pay, negative rate means shorts pay).
II. 3 Major Pitfalls Newbies Must Avoid
❌ Point Timing to Grab Benefits: 15 seconds error window before settlement, manual operations will definitely get swept (Altcoins fluctuate 4% in 5 minutes, grabbing benefits can lead to loss of principal).
❌ Ignoring Leverage Amplification: Opening a 10x leverage position with a capital of 10,000 U, a 0.1% fee rate directly deducts 100 U (10 times the risk of spot fluctuation).
❌ Misjudging Long-Short Signals: Positive high fee rate ≠ Longs are guaranteed to win (it may be a main force inducing longs, leading to losses when getting in).
III. 3 Conditions for Expert Arbitrage (Newbies Shouldn't Touch)
Millisecond-Level System: Program Monitoring + API Automatic Ordering (Manual delay > 500ms will definitely incur losses).
Mainstream Coin Hedging: Only trade BTC/ETH, Long-Short 1:1 positions, earn 3%-5% annualized through rate differences (requires tens of millions in capital).
On-Chain Data Coordination: Continuous 3 cycles of high fee rates + surge in position volume, judging the main force's direction (not something ordinary people can play with).
IV. 3 Iron Rules for Newbies to Stay Alive
Understand Settlement Cycles: Mainstream coins 8 hours (04/12/20 UTC), Altcoins 4/2 hours (more volatile).
Avoid Extreme Rates: When rates > +0.1% or < -0.1% (APP red alert), reduce positions by 50% to prevent bloodletting.
Use as a Contrarian Indicator: Continuous 3 times of high positive rates → Beware of waterfalls, continuous negative rates → Be cautious of upward sweeps.
V. Final Warning: Funding Fee is a Tool for Experts to Cut Each Other; Newbies Focus on 0.1% “Mosquito Leg,” but Expose Themselves to 10%+ Fluctuation Risks.
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