All terms
The periodic payment between longs and shorts in a perpetual market.
When the perp trades above spot, longs pay shorts. When it trades below, shorts pay longs. The mechanism nudges the contract back toward the underlying price.
Extended periods of high funding show one side is heavily crowded and paying for the privilege, which tends not to last.
Funding above 0.1 percent per eight hours is expensive and usually signals an overheated long side.
That funding is a fee the exchange charges. It is paid between traders, from the crowded side to the other, and it is a live readout of positioning. Extreme funding tells you where the leverage is, which is usually where the liquidations happen next.
Common questions
Who pays the funding rate?
What does a very high funding rate tell me?
Where this comes up on the site
The guides that actually use this word, rather than a list of everything we have written.
Where to go next
More trading terms
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