#资金费率 People who have no judgment on the market, make contracts, make random guesses, and lose nine out of ten times. Therefore, only very few people can make a profit in the contract market. So, can you make money by following the trend in contract trading? Today we will talk about the parameter of contract funding rate, and help you judge the market.

1. What is the funding rate?

Funding rate is the difference between the perpetual contract market price and the spot price, and is a periodic fee paid to long or short traders. When the market trend is bullish, the funding rate is positive, in which case long perpetual contract traders will pay funding fees to short perpetual contract traders. Conversely, when the market is bearish, the funding rate is negative, and short perpetual contract traders pay funding fees to long perpetual contract traders.

Funding is not a fee charged by the exchange, but a payment between long and short positions to make the transaction price close to the spot index price. The positive or negative funding rate determines which party needs to pay. In layman's terms, the exchange does not charge any funding fees, and the money is directly transferred between users.

2. How is Binance’s funding rate calculated?

Funding rate is calculated using the following formula:

Funding amount = Notional value of position x Funding rate

(Notional value of position = Mark price x number of contracts held)

Binance does not charge any fees from the funding rate, and the funds are transferred directly between users.

Here comes the point! Currently, Binance Futures' perpetual contracts make funding payments every 8 hours, at 00:00, 08:00, and 16:00. Therefore, only if the trader still has a position at these times will he or she need to pay or receive the corresponding funding fees. If the trader does not have any positions at the time, he or she will not need to pay any funding fees. Therefore, if you close your position before the scheduled funding fee collection time, you will not receive or pay any funding fees.

Let's take BTC today as an example. The current BTC contract rate is 0.1%. If you are long BTC, the margin is 100U, and the multiple is 8, then every 8 hours, your position will be multiplied by 800U times 0.1% = 0.8U. If the rate is always maintained at the base of 1%, then every 8 hours, 0.8U will be deducted as a subsidy to the short traders.

Friends who play contracts must pay attention to the opening time. For trading pairs with extremely high fees, you can close the position in time before the fee settlement, and then reopen the position after the fee settlement time. This can save a considerable amount of transaction fees.

3. How to find trading opportunities through contract rates (altcoins)

Pay attention to the rapidly increasing rates of altcoins in the market. If the contract rate increases rapidly in a short period of time (generally a negative rate), it proves that the number of people opening short positions in the market is increasing. If the contract rate has reached its peak, you can buy the spot with confidence at this time. There is a high probability of a good rate of return. However, the risk is relatively high and you cannot gamble with a large position.

4. How to use rates to help judge the market

Generally, for small-scale altcoins, the chip dispersion rate is not high, and the dealer has the ability to manipulate the market. The dealer will first open a large position long order, and then quickly raise the price of the currency to attract enough liquidity to do the opposite. If there are a lot of people who open short positions, the dealer can take a big wave in terms of funding rates. Moreover, they have multiple contracts in hand and enough opposite orders, which can achieve a win-win situation of rates + contracts, and the losses caused by the spot market pull are nothing to the dealer.

Therefore, if you find a currency that is rising rapidly, first observe the market value of the currency, whether there are any contracts, whether the contract rates are rising rapidly, and the degree of match between the spot trading volume and the market value. If the spot trading volume is much larger than the market value of the currency, and the contract trading volume is more than 10 times the market value, then you can consider chasing positions at high levels, as there is a greater probability of obtaining a higher rate of return.

Okay, that’s all we have to say about contract rates today. Finally, I would like to give some advice to my friends: try not to participate in contract trading, especially for novices. If you don’t know how to control your positions properly, it is easy to get liquidated. The best way is to stay away from contracts!