Funding Rates
Regular futures have an expiry date, so their price naturally converges with spot on that day. Perpetual futures never expire, which creates a problem: the futures price could drift away from spot indefinitely. Funding is the mechanism built to prevent that. When the perp trades above spot, the expensive side (longs) gets charged to pull the price back down; when it trades below, it works in reverse.
Settlement varies by exchange but is typically once every 8 hours — three times a day (some venues do it hourly). The amount is position size times the funding rate. For example, at a funding rate of +0.01%, holding a 10-million-won long at settlement means paying 1,000 won to the short side. Whoever held a 10-million-won short at that moment receives 1,000 won.
1,000 won per settlement sounds tiny, but three times a day it compounds into a different story. 0.01% three times daily works out to roughly 11% per year. The longer you hold, the more this cost (or income) quietly accumulates. If your style is holding positions for days, funding math matters as much as price P&L.
Funding also gets read as a thermometer of market mood. A high positive rate means lots of people are willing to pay a premium to stay long — a sign the market is crowded on the long side. Negative means crowded short.
But showing you the crowding and telling you the next direction are entirely different things. In bull markets, funding has stayed positive for weeks while price kept climbing. Funding shows 'who's paying to hold right now' — it is not a prediction tool.
What the data actually shows
Barobara's setup stats count where price actually went after a chart signal fired, so funding is not included in them. That means if you hold a perp position for a while, your real P&L is the stats plus or minus accumulated funding. When directional odds are near a coin flip, a cost line like this can flip the sign of your expected value. The other guaranteed per-trade cost, trading fees, is covered in the fee comparison.Common misconceptions
'High funding means a drop is coming' is a common misconception. High funding shows long-side crowding — it doesn't tell you when it unwinds. In past bull markets there were real stretches where funding stayed high while price climbed much further. Another misconception: 'funding is a fee the exchange takes.' Funding is money exchanged between traders; the exchange's cut is the separate trading fee.
FAQ
Q. When and how do I pay funding?
If you're holding a position at the settlement time (usually every 8 hours; hourly on some exchanges), it's automatically debited from or credited to your account. Close the position before settlement and you neither pay nor receive that round.
Q. Can I make money by standing on the receiving side of funding?
You'd collect funding income, but the position's own price swings can be far larger than the funding you collect. There are ways to offset this by holding spot and futures in opposite directions, but fees and upkeep mean it isn't free money.