Trading

Funding rate

Also called: funding

In shortA periodic payment between long and short traders that keeps perpetual futures prices close to the spot price.

When the perp trades above spot, the funding rate is positive and longs pay shorts; when it is below, shorts pay longs. Payments usually happen every 8 hours (hourly on some venues).

Very high positive funding shows a crowded long trade — a setup that can end in a long squeeze.