#Binance #LearningTogether 🤓

🔻Before opening a short, check the funding rate or you could be liquidated mercilessly 🚫😨

Many traders see the price dropping and think:
⬇️"I’m going short".

💀🚫But there is a very common trap in futures that liquidates thousands of people: the funding rate being very negative.

Let’s keep it simple♻️ When the funding is negative, it means that shorts pay money to longs every certain period (approx. 4h).

That's already bad.✖️ But when the funding becomes very negative, the problem is greater.

📛Real example:
At $RIVER it reached -2 %.
That is extreme.

What does that mean?
👉 Too many people are short
👉 Everyone is betting that the price will go down
👉 There is panic in the market
👉 The market is unbalanced

And what usually happens afterward?
♦️ Longs start to make money just for being open.
♦️More people go long because of that incentive.
♦️The price goes up a bit (sometimes very little).
♦️Shorts start to lose.
♦️They get liquidated.
♦️Those liquidations buy automatically.
♦️The price goes up more.

This is called a short squeeze: a rapid increase caused by chain liquidations.

If you were short at that time:
❌ you pay funding
❌ the price rises against you
❌ you get liquidated
Triple punishment.😵

To understand the levels:
1) Normal funding: ±0.01% to ±0.03%
2) High funding: ±0.05% to ±0.1%
3) Extreme funding: ±0.2% or more
4) -2.0% = nuclear war zone for shorts ☢️ 💀🚫

😵There, shorting is like:
standing in front of a train for some coins.🚶🏻‍♂️🚂

Can the price drop afterward? Yes.
🔻But many times the market first goes up to eliminate the shorts, and then continues the real drop.

Simple rule that saves accounts:
☑️If the funding rate is very negative, DO NOT go short

It’s better to wait for:
☑️it to return close to 0 or go positive

Then the market is more balanced and the risk is lower. In futures, the one who survives wins.

Patience🍵 = money💲