What is Funding Rate? 💸 This often overlooked fee can significantly impact your long positions, potentially shrinking profits faster than price volatility. Many traders ignore these periodic costs, yet they are crucial for managing futures trades.

🔹 Funding Rate is a core mechanism designed to balance prices between Spot and Futures markets. It ensures that the derivative's price remains closely aligned with the true value of the underlying asset.

🔸 When Funding is positive, it typically signals a euphoric, bullish market sentiment. In this scenario, Long positions pay Short positions, meaning you might incur fees every 8 hours, even if the price moves in your favor.

Conversely, when Funding is negative, it indicates bearish sentiment. Here, Short positions pay Long positions. This can either reduce costs for your long positions or increase costs for your short positions.

Understanding Funding Rate is vital for futures traders to accurately assess potential costs and profitability. Always monitor these periodic payments to manage your strategy effectively.

Information is for market updates, not investment advice. 📈