Perpetual Futures And Funding Rates

• A positive funding rate generally means more traders are positioned long relative to short.
• A negative funding rate suggests the opposite, with short positioning dominant.
• Funding is paid and received directly between traders, not the exchange, and applies continuously while a position is open.

Persistently high funding rates can erode returns on a position over time, even if the underlying price direction is correct, since holding costs accumulate with each funding interval. Perpetual futures also typically involve leverage, which magnifies both gains and losses, so understanding funding costs alongside liquidation risk is essential before using this instrument type.