SignavaWhy funding exists
A perpetual contract has no expiry date, so nothing forces its price to meet the spot price. Funding fixes that: when the contract trades above spot, longs pay shorts; when below, shorts pay longs. The payments nudge traders toward the side that pulls the price back.
Working out the cost
Funding payment = position size × funding rate.
A $2,000 long with a funding rate of +0.01% pays $0.20 at each funding time — about $0.60 a day with 8-hour funding. At +0.10% it's $6 a day, which adds up on longer holds.
What funding tells you
- Normal (around +0.01%): balanced market.
- Very positive: crowded longs; a sharp drop can trigger a wave of long liquidations.
- Negative: crowded shorts; a squeeze upward is possible.
The Insights tab in the Signava app shows funding rates across major exchanges, free for every user.
Frequently asked questions
How often is funding paid?
On most major exchanges every 8 hours (some contracts every 4 hours or 1 hour). You only pay or receive it if you hold a position at the funding time.
Is high funding bullish or bearish?
Very high positive funding means longs are crowded and paying a lot to stay in — often a sign of excess optimism that can unwind sharply.
