GlossaryFunding rate
Funding rate
The funding rate is the financing rate of perpetual futures. When it is positive, longs pay shorts; when it is negative, shorts pay longs. It shows which side currently wants more leverage and is paying for it.
How to read it
- Slightly positive is the normal state in a rising market.
- Strongly positive means many want to be long and are paying for it. The market is one-sided, and a pullback hits many leveraged longs.
- Negative means shorts are paying. If the price rises despite negative funding, shorts can get caught in a squeeze.
- Extreme values are more a sign of overheating than a timing signal. Funding can stay high for a long time while the trend continues.
- Above zero, the line is drawn in the color for positive, below zero in the color for negative. The scale is symmetrical around zero.
Limitations
- The average across exchanges is unweighted. A small exchange with an extreme rate pulls it just as strongly as a large one.
- Funding is only set at fixed times. On shorter candles, the curve runs in steps, and the pane header states the resolution, such as “Resolution 8 h”.
- If the visible range reaches further back than the values, the header says “History from …”.
- Funding is only available for symbols traded as perpetuals.