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To calculate funding fees, check the funding fee calculator on the site.
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What is Funding Rate?
Funding Rate
Futures trading includes Perpetual Futures, which have no expiration date. The mechanism that regulates this product so that it does not deviate too far from the spot price is the funding fee.
Funding fee = regular cost exchange between long position ↔ short position
Settlement cycle: Every 8 hours (00:00, 08:00, 16:00 UTC)
How funding fees work
Futures price > Spot price (positive (+) funding fee)
Situation: Market very greedy, lots of longs
Result: Long position holder → funding fee paid to short position holder
What it means: Curb excessive longs and maintain balance.
Futures price < Spot price (negative (-) funding fee)
Situation: Market fear, lots of shorts
Result: Short position holder → funding fee paid to long position holder
What it means: suppress excessive shorting
Funding fee calculation method
Funding fee amount = Position size × Funding rate (%)
Example:
Position size: $10,000 (1 BTC, price $100,000)
Funding rate: +0.01% (every 8 hours)
Funding fee = $10,000 × 0.01% = $1/8 hour
Settled 3 times a day = $3/day
1 month = $90/month
Calculate the actual cost at Funding Fee Calculator on the site.
Reasons to be careful when funding fees are high
High volume funding fee = excessive greed signal
If the funding rate is more than 0.1% (109% per annum):
- This means that there are excessive longs piled up in the market.
- Increased likelihood of correction or plunge
- Avoid high leverage long positions
| Based on funding rate | market conditions | Strategy |
|---|---|---|
| 0.01% or less | summit | Enter according to direction |
| 0.05~0.1% | greed | Long caution |
| 0.1% or more | extreme greed | 🔴 Long Risk, Short Opportunity |
| -0.05% or less | horror | 🟢 Long Opportunity Potential |
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3 strategies for utilizing funding costs
Strategy 1: Reverse use of funding fee (reverse contract)
Entering a reverse position in the high funding cost section:
Funding rate +0.1% or more → Short entry
Receive funding fee every 8 hours + expect profit from price decline
Risk: In a strong bull market, the return on funding fees may be less than the loss in price.
Solved: Required stop loss setting
Strategy 2: Adjust position timing
Currently holding a long position → Enter immediately after the funding fee settlement time (00:00, 08:00, 16:00 UTC)
→ Positions can be maintained for 8 hours without paying a funding fee
Short-term scalping: Entry just before settlement → Liquidation immediately after settlement to avoid funding fees
Strategy 3: Spot/Futures Hedging (Funding Fee Farming)
Hold spot BTC + enter short futures in same position
→ Regardless of price changes (hedged)
→ In areas with high funding fees, shorts receive funding fees from longs.
Example:
Hold 1 BTC spot
Short futures 1 BTC (0.05% received every 8 hours)
Daily receipt: 0.15% (54.75% per year)
How to check funding fee
| Exchange | Check Location |
|---|---|
| Bybit | Futures trading screen → Funding fee at bottom right |
| OKX | Futures information → Funding rate |
| bitget | Top of gift screen |
Tip: Check the current funding fee and estimated cost directly at Funding Fee Calculator on site.
Related guides
- Futures trading clearing price calculator →
- Position size calculator →
- Leverage risk management method →
- Scalping Strategy →
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