What are the factors that determine the funding rate on FTX perpetual futures?

3 answers

• smmpan27Dec 16, 2023 · 2 years ago
  The funding rate on FTX perpetual futures is determined by several factors. One of the main factors is the difference between the contract price and the underlying asset price. If the contract price is higher than the spot price, the funding rate will be positive, and if it is lower, the funding rate will be negative. Other factors include the interest rate and the demand for the contract. Traders need to understand the funding rate because it affects their funding costs and can impact their profitability. By monitoring the funding rate, traders can make informed decisions about their positions and manage their risk effectively.
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• asadowJan 23, 2025 · 6 months ago
  The funding rate on FTX perpetual futures is influenced by market forces and is designed to keep the contract price in line with the underlying asset price. When the contract price deviates from the spot price, the funding rate adjusts to incentivize traders to bring the contract price back in line. This mechanism helps to prevent arbitrage opportunities and ensures that the perpetual futures market remains efficient. Traders should pay attention to the funding rate as it can provide valuable insights into market sentiment and potential trading opportunities.
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• ilovemathFeb 09, 2023 · 2 years ago
  The funding rate on FTX perpetual futures is determined by the interest rate differential between the long and short positions. When the funding rate is positive, long positions pay funding to short positions, and when it is negative, short positions pay funding to long positions. This mechanism helps to balance the market and prevent one-sided positions from dominating. It's important for traders to understand the funding rate as it can impact their trading costs and overall profitability. By monitoring the funding rate, traders can adjust their strategies accordingly and take advantage of market conditions.
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