If you are trading futures on Binance, you must have been shocked to see a large funding fee suddenly 'stealing' your profits, even when your position is not yet losing.
Then the question arises:
“Why can the funding fee be that high? Is Binance making a profit from it?”
The answer is: it is not Binance that takes it. The funding fee is not a fee from the platform, but a cost between traders to keep the futures contract price stable with the spot price.
🔍 What is the Funding Fee?
The Funding Fee is a periodic cost paid by traders on the majority side of the position (e.g., many longs) to traders on the minority side (e.g., shorts).
This fee is paid every 8 hours, at 07:00, 15:00, and 23:00 WIB.
For example:
If many people open long positions, the funding fee becomes positive.
This means that you who are long will pay the funding fee to the short traders.
If you open short when the rate is negative, you actually receive the funding fee.
💥 Why Can Funding Fees Be High?
1. Skewed market – For example, if everyone FOMO and opens long, then the demand for longs increases → funding fee rises drastically.
2. The futures price is too far from spot – The system will balance by increasing the funding fee.
3. Hype altcoins – Pairs like $PEPE , $TAO , $SUI , or other hype tokens can have very high funding fees due to a very unbalanced market.
⚠️ Its Effect on Traders
You can lose even if the price hasn't hit your SL, because your profit is eroded by fees every 8 hours.
If you open a large position and hold it for days, the funding fee can be very painful.
Many beginner traders are unaware and think they lost due to wrong analysis — when in fact, it is the funding fee that is eating into their PnL.
✅ Tips to Avoid Losses from Funding Fees
1. Check the funding rate before entering a position. You can see it in the 'Funding' section on the futures page.
2. Avoid opening large positions in pairs with high funding, especially volatile hype altcoins.
3. Close your position before the funding time if you only want to scalp / short swing.
4. If the positive funding is high, consider taking the opposite position if analysis allows.
5. Remember: Funding fees are not always detrimental. You can receive fees if you are on the minority side.
🧠 Conclusion
The funding fee is an important part of the futures mechanism, but it is often misunderstood. Understand how it works, check first before opening a position, and you will last longer in the futures market.
Have you ever lost due to the funding fee? Share your experience in the comments!
