Positive or negative funding? Who pays whom on perpetuals, for Filipino traders

The funding rate is one of those numbers that sits on every perpetual futures screen and that many traders in the Philippines ignore until it shows up in their balance. The basic idea is simple once you see it in words. Perpetual contracts have no expiry, so at regular intervals traders on one side pay traders on the other side to keep the contract price near the spot price. The sign of the rate tells you which side pays.

Positive means longs pay

When the rate is positive, holders of long positions pay holders of short positions at each settlement. This usually happens when more traders want to be long and the perpetual trades above spot. If you hold a long position through a settlement with a positive rate, a small amount is deducted. If you are short, you receive it. Nothing is exchanged if you have no position at the moment of settlement.

Negative means shorts pay

When the rate is negative, the direction reverses: shorts pay longs. This tends to appear when many traders are short and the perpetual trades below spot. A long position held through negative funding receives payments, while a short pays them. The rate can switch from positive to negative and back within a day, so check it each time you open or hold a position rather than assuming it stays the same.

A worked example in words

Imagine you hold a long position worth a certain amount of pesos in USDT terms, and the rate is positive. At settlement you pay that rate multiplied by the full position value, not by your margin. With leverage, the position value is several times your margin, so the payment is larger relative to your own money than the small percentage suggests. Hold through several settlements and those payments add up.

Where to read live values

On each exchange, open the perpetual contract and look near the contract name for the current funding rate and the countdown to the next settlement. The contract details show the settlement interval, which can differ between contracts. Your account history records every funding payment. Review them weekly alongside trading fees so you understand what each position really cost.

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Scenario checkpoint

• Remember that positive funding means longs pay and negative means shorts pay.
• Check the rate each time you open or hold a position, since it can switch sign.
• Calculate funding on full position value, not on your margin.
• Read the live rate, countdown and interval on the contract screen and review your history weekly.