funding rates are periodic payments between long and short perps traders that help keep the perp price tracking the underlying market. depending on the sign, one side pays and the other receives.
the three parts to remember.
funding is not a trade fee.
it is a venue mechanism paid between market sides, not the interface fee on an order.
time matters.
holding across more funding intervals can change the cost or income of the position.
crowding has a price.
extreme funding can signal that one side of the market is crowded.
why it matters.
understanding the term helps you recognize what can change the outcome of a trade and which questions to ask before acting.
simple language does not remove market risk, but it makes the decision easier to understand.
educational information only. trading crypto and using leverage can result in loss.
