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You’ve probably seen the term funding fee a lot in articles about cryptocurrency trading.
Understanding funding fees is very important as it can affect your trading profits.
In this article, we’ll take a look at Bitget funding fees.
What is a funding fee?
Funding fees are fees incurred by traders who maintain a position in a futures trade.
This fee is used to ensure that the futures market price matches the spot market price.
In essence, it is used to ensure that traders cannot profit from the price difference between the futures market and the spot market.
Bitget funding fees are calculated and charged every 8 hours at 00:00 UTC, 08:00 UTC, and 16:00 UTC.
The funding fee is determined by the difference between the futures market price and the spot market price.
If the futures market price is higher than the spot market price, long position holders pay the funding fee and short position holders receive the funding fee.
The opposite is true if the futures market price is lower than the spot market price.
BitGet Funding Fee Calculation Formula
The Bitget funding fee is calculated using the following formula
Funding Fee = Position Value * Funding Rate
If the funding rate is positive, traders with long positions will pay the funding fee.
If the funding rate is negative, traders with short positions will pay the funding fee.
How to check your funding rate
- Go to the Futures Trading page
- Hover your mouse over “Futures Info” at the top of the page
- Click on “Funding Rate” from the drop-down menu
- Select the trading pair and cryptocurrency type for which you want to check the funding rate
Since the funding rate is calculated every 8 hours, you’ll see that the funding rate history is also calculated at that time.
How to utilize Bitget funding fee
Since the funding rate is mostly positive, there is a high probability that the short position holder will receive the funding fee.
An investment strategy with this in mind is called selling the funding rate.
You can think of the funding rate as the ratio of traders holding long positions to those holding short positions.
In other words, you can infer which positions people are holding more based on the funding ratio.
While more traders holding a position doesn’t necessarily mean the price will go up or down, it can be one indicator of which position to take.
In this article, we took a look at Bitget funding fees,
Understanding what funding fees are, how they work, and how they affect your trading profits is crucial for successful trading.