Can a Trader Avoid Paying the Funding Rate by Closing a Position Just before the Interval?
Yes, a trader can avoid paying or receiving the funding rate by closing their position before the scheduled funding time. The payment is only processed for positions that are open at the exact moment of the funding exchange.
This creates a small window of opportunity for short-term traders to time their entries and exits to avoid a negative funding payment or capture a positive one.
Glossar
Funding Payment
Mechanism ⎊ Funding Payment within cryptocurrency derivatives represents a periodic exchange, typically occurring hourly or every eight hours, predicated on the differential between perpetual contract prices and the underlying spot market index.
Closing a Position
Action ⎊ Closing a position is the fundamental trading action of executing a reverse transaction to nullify an existing open long or short exposure in a financial derivative or underlying asset.
Funding Rate
Mechanism ⎊ Funding Rate represents a periodic payment exchanged between traders holding opposing positions in perpetual futures contracts, establishing an equilibrium between contract prices and the underlying spot market.