The invisible rent on your perpetual position — turned into dollars you can see.
Funding = notional size × rate, charged every interval — most exchanges use 8 hours (3× daily). A positive rate means longs pay shorts; a negative rate means shorts pay longs (enter a negative number to see what you'd receive). The "annualized" figure is what the current rate compounds to over a year if it never changed — it will change, but the number shows how expensive a crowded trade really is.
The quiet danger: funding is deducted from margin. On a leveraged position held for weeks, paid funding drags your margin down and your liquidation price closer — the position can die without price moving at all.
| Rate per 8h | Market mood | $10,000 position, 30 days |
|---|---|---|
| 0.01% (baseline) | Neutral — the default on most exchanges | ≈ $90 |
| 0.05% | Crowded longs, heated market | ≈ $450 |
| 0.1%+ | Euphoria — longs paying dearly | ≈ $900+ |
| Negative | Fear — shorts paying longs | You get paid to be long |
Ignoring funding on swing trades — a "free" 2-week hold at elevated funding can cost more than the fees of ten trades. Using funding rate alone as a signal — extreme funding says the boat is crowded, not when it tips; combine it with structure. Forgetting it compounds against leverage — funding is charged on notional, so at 10x it eats your actual margin 10× faster than the headline rate suggests.