I just saw that some of you are still confused about funding fees, so I want to share a bit of experience. Actually, what negative funding is isn't as complicated as many people think; it's just a mechanism to balance the market.

Basically, when there are too many longs or shorts dominating, the difference between the spot price and futures will create funding fees. What is negative funding? It occurs when the market is all long, and the futures price is higher than the spot, then those who are short will have to pay those who are long. Conversely, positive funding means longs have to pay.

I notice that funding usually ranges from -0.05 to 0.05, but sometimes it can go up to -2% per session when the market is too one-sided. This fee is calculated over a cycle of 4 or 8 hours depending on the exchange, and the amount you pay or receive depends on your margin and leverage.

The interesting part is that negative funding has nothing to do with the exchange. It’s money exchanged between traders; the exchange is just a platform for us to trade. It’s not a scam or anything; it’s just a market rule to keep things balanced.

In fact, once you understand what negative funding is and how it works, you can leverage it in your strategy. If the market is too bullish, the funding fee will be high, and short positions can earn quite good fees. Conversely, when the market is bearish, longs will benefit from negative funding.

The key is to understand the mechanism correctly and trade smartly, so that funding fees don’t eat up all your profits. On Gate, there are also tools to track these funding rates, so you should check them regularly to optimize your positions.