What is the funding fee for traders working in futures and margin trading? This is a frequently asked question. Put simply, it’s a cost you pay at regular intervals to keep your open position. With average 8-hour cycles, payments are made 3 times per day, but depending on market conditions, it can sometimes be 4 times.

When you ask what the funding fee is, you actually need to know that it has to do with the price difference between the spot and futures markets. If a pair is more expensive on the spot side than on the futures side, it means that short positions are dominant in that market. In this case, the funding rate turns negative. The larger the price gap becomes, the higher the fee paid by those running short trades, and the longs receive part of that fee.

The funding rate shown on exchanges is this metric expressed as a percentage. This fee transfer continues until a price balance between the spot and futures is reached. There’s an interesting point here: the market often moves opposite to the majority, so it’s not advisable to blindly trust funding rate data; it’s more logical to think of these figures as an indicator. When opening your positions, you can use this information to understand market psychology.