Giordano Salvatori, founder of STA · 31/10/2026 · 5 min read
The funding rate is a payment that traders in a perpetual contract exchange at regular intervals. It doesn't go to the exchange: it passes from one side to the other, from longs to shorts or the other way round. A perpetual contract, unlike a traditional future, has no expiry date. Without a date on which the contract price must coincide with the spot price, another mechanism was needed to keep them close. That mechanism is funding.
The reasoning is simple. If the contract costs more than spot, many people want to be long and are pushing the price up. Funding turns positive and makes longs pay, so holding that position costs money and the enthusiasm cools. If the contract costs less than spot the opposite happens, and shorts pay. If you don't yet know what these mean, see long and short, start there.
With a positive funding rate, longs pay shorts. With a negative funding rate, shorts pay longs. If you have no open position at the moment of payment, you neither pay nor receive anything: only those who are in at that instant count.
A detail that surprises beginners: funding doesn't depend on whether you are in profit or in loss. You can be in profit and still pay, because the payment is calculated on the value of the position and not on your result.
Every exchange has its own formula, but the idea is always the same: one part reflects the difference between the contract price and the spot price, and one part is a base rate. You don't need to redo the calculation, you just read the rate the platform shows and multiply it by the value of your position. It is often paid every eight hours, but the interval depends on the exchange and the contract, so always check yours.
An illustrative example, with invented numbers. You have a long position worth $1,000 and funding is 0.01% at each payment.
| Made up example | Per payment | In one day (3 payments) |
|---|---|---|
| Funding 0.01% on $1,000 | $0.10 | $0.30 |
| Funding 0.05% on $1,000 | $0.50 | $1.50 |
| Funding 0.05% on $10,000 | $5 | $15 |
It looks small, but it adds up. With 0.01% per payment, keeping a position open for a year costs about 11% of its value. If you use leverage, that percentage is calculated on the value of the whole position and not on the margin you paid in, so it weighs more on your capital. To see how leverage changes the picture, there is the leverage calculator.
Funding is a thermometer of crowding. A strongly positive funding rate for days says that many people are betting on a rise with leverage. A strongly negative one says the opposite. A position crowded on one side is fragile: if the price moves against the majority, many stops trigger together and the move gets amplified. To understand how that mechanism works, read the guide to leverage.
One warning: don't turn a clue into a forecast. A high funding rate doesn't mean the price will fall, it means the market is lopsided. A market can stay lopsided for a long time, and people who sell just because funding is high often find that the market knew something they didn't. Funding should be read alongside other things: the trend, the volumes, the news, the size of open positions.
It depends on which side you are on. If you hold a position on the crowded side, funding is a cost that adds to fees and spread. If you are on the opposite side, you collect it. But it would be a mistake to open a position just to collect funding, because the price can move against you far more than funding pays you.
For people who hold trades for a few hours, funding matters very little, and it may not even apply if the position is closed before the payment. For people who hold a position for days or weeks, funding enters the account like the rent on a house: small each month, significant at the end of the year. We also talk about hidden costs in is trading online worth it.
If you want to try reading it with fake money, the way is a demo account. The general picture, from the basics to the costs, is in the guide to mindful online trading.
Among the data STA's agents read before every analysis is derivatives data, funding included, because it shows how crowded a direction is and how much it costs to keep a position open. How they weigh it is part of the method we don't describe. Ten artificial intelligence agents analyse the markets twice a day, with a debate between a Bull and a Bear, and the funds stay in your OKX account. Which contracts are available depends on the country you live in.
The DEMO is free forever, with real prices and the same cards as REAL. You need an account. During the launch phase, which began on 16 October 2026, STA's fees are temporarily disabled, even in REAL; the ordinary price list, suspended while the launch lasts, is 18% of the positive net result of each day, with no offsetting of losses. The history of the cards, losses included, is public on GitHub.
Every card as soon as it closes, with the result and what STA learned from it. It's free and you don't need to sign up.
Follow the channelA DEMO account with virtual capital and real prices, the same cards as REAL users.
Try DEMO for free →This article is for information only and is not investment advice. Trading crypto-assets involves a high risk, including the total loss of the capital used. Numerical examples are for illustration.
AI trading signals: what they are, whether they really work, how to read entry, stop and target, and what to ask before trusting a service.
Trailing stop: what it is, how to set the distance and when to use it instead of a fixed stop loss, with an example and the limits to know.
Trading psychology: the 5 emotional mistakes that cost the most (FOMO, loss aversion, overtrading) and concrete rules to keep them in check.
