A "tiny" funding rate is a leverage-multiplied bleed
Every perpetual futures contract uses funding to keep its price glued to spot. Roughly every eight hours the two sides settle a payment: when funding is positive the longs pay the shorts, and when it is negative the shorts pay the longs. The rate is quoted against the notional value of your position — the full size you control — while your margin is only a fraction of that. Leverage is exactly that fraction inverted, so the cost of funding measured against the money you actually risk is the quoted rate multiplied by your leverage. That is why a 0.01% eight-hour rate, which sounds like a rounding error, is 0.03% of notional per day but around 0.3% of the margin per day on a 10x position, and 0.6% per day at 20x. Held for a week, that quietly compounds into a hole the trade has to climb out of before it makes you a cent.
This calculator turns the eight-hour rate into the numbers that actually decide whether a position is worth holding. It reports the funding paid over your chosen holding period, the annualized funding APR on notional, the break-even price move — how far price must travel in your favour just to offset the funding you paid — and the days to eat margin, the worst-case count of days that funding alone, with the price frozen, would take to withdraw your entire margin and hand you a liquidation with no adverse move at all. If that last number is small, you are not holding an investment, you are renting a position by the day.
How to use it
1. Pick your direction. Longs pay when funding is positive; shorts receive it (and pay when the rate is negative).
2. Enter your position notional and leverage — margin is derived as notional ÷ leverage.
3. Put in the current 8-hour funding rate from your exchange (it can be negative) and how long you plan to hold.
4. Read the break-even price move: your take-profit needs to clear it before the trade is genuinely green. Confirm your true net with the real futures profit calculator.
Common mistakes
Reading funding against notional, not margin. "0.01% is nothing" is true on notional and false on margin — at 25x it is 0.75% of your capital a day. Assuming funding is constant. In a hot market the rate can jump ten-fold for days; treat the APR here as a snapshot, not a promise. Forgetting the sign flips with direction. A crowded long book means positive funding that pays shorts — sometimes the carry is a reason to be on the other side. Ignoring compounding on the account. Funding is debited from margin, which lowers your buffer and moves your liquidation price closer with every payment.
FAQ
Is funding the same on every exchange? No. The eight-hour cadence is common but some venues fund hourly or every four hours, and each computes its own rate from its own premium and interest components. Always read the rate and interval from the exchange you actually trade on.
Can I earn funding instead of paying it? Yes — take the side that receives. A delta-neutral position that is long spot and short the perp collects positive funding while carrying little price risk; this "cash and carry" is the basis of funding-rate arbitrage. The break-even and APR here are exactly the numbers that trade lives or dies on.
Does funding move my liquidation price? Indirectly but really. Each payment leaves or enters your margin balance, and a smaller balance sits closer to liquidation. Over a long hold, a steady negative carry can walk you into liquidation even on a position that never went against you.