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  2. /Glossary
  3. /Funding Rate
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trading

Funding Rate

A periodic payment between long and short traders in perpetual futures markets that keeps the contract price close to spot price.

Definition

A periodic payment between long and short traders in perpetual futures markets that keeps the contract price close to spot price. When funding is positive, longs pay shorts, meaning the market is bullish. Negative funding means shorts pay longs. Traders use funding rates to gauge market sentiment.

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Related Terms

Perpetual Swap

A derivative contract similar to futures but with no expiration date.

Long Position

A trade that profits when an asset's price increases.

Short Position

A trade that profits when an asset's price decreases.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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