I've noticed that many newcomers are confused about what funding is on futures. Let's clarify it without complicated terms.

Fundamentally, funding is a mechanism that redistributes money between traders depending on the direction of their positions. When the majority of the market is long, funding becomes positive, and long traders pay short traders. If shorts dominate, the situation reverses.

Why is this even necessary? Otherwise, the futures price wouldn't stay in line with the spot price. Funding acts as an anchor that keeps the futures market in balance. When one side becomes too skewed, fees start to increase, naturally restoring equilibrium.

Here's what beginners need to understand: funding is deducted every few hours, regardless of whether the price is moving or staying still. This means that even during sideways markets, you can make or lose money just based on the positions you hold. And one more point — when funding is extremely high, it's a signal that the crowd has already entered a position. Such moments often precede reversals.

Overall, funding is a fee for imbalance. Remember this, and you'll understand the market better.