What Are Funding Fees in Futures?
#Futures #BTC Funding fees are payments exchanged between long and short traders in perpetual futures contracts. These fees keep the contract price close to the underlying asset’s spot price.
• When Positive Funding Rate: Long traders pay short traders.
• When Negative Funding Rate: Short traders pay long traders.
How to Use Funding Fees Strategically
1. Monitor Funding Rates:
• Low or negative funding rates favor long positions.
• High rates favor short positions.
2. Timing Your Positions:
• Enter positions when funding rates align with your market outlook.
• Exit or reduce exposure when fees become too high.
3. Hedge Volatility:
If you expect a sideways market, you can open an opposing spot position to offset potential funding fees.