Bitget Futures: Funding fee

Funding fee is an important concept for investors and traders in cryptocurrency trading. Primarily designed to ensure fairness and stability in the market, it is a mechanism to balance long and short positions in the futures market.

1. Funding fee introduction

Funding fee is a core operating mechanism of Bitget Futures.

Funding fee is designed to ensure that the trading price of a perpetual swap closely follows the underlying reference price through the regular exchange of fees between long and short positions.

2. Funding fee details

2.1 Bitget does not charge any fee. The funding fees are exchanged among users.

2.2 The funding fee is incurred once every eight hours, at 8:00 AM, 4:00 PM, and 12:00 AM (UTC+8). You will only be required to pay or collect a funding fee if you hold a position at any one of these three timings.

For a better user experience, we will calculate the funding fee without interrupting trading. Therefore, there may be a delay in the calculation time when collecting or distributing funding fees. For example, when a trader opens or closes a position at 7:00:05 AM (5 seconds past 7.00 AM), the funding fee might still incur. Pay attention to the time when you make your trade.

2.3 When a funding fee is charged, it will be deducted from the fixed margin of the user's position, up to the amount where the user's margin rate is equal to the maintenance margin rate. If a certain percentage remains, the excess will not be charged. The actual funding fee a user can receive also depends on the total amount deducted from the counterparty's account by the system.

If a user's leverage is relatively high, the system will not charge a funding fee in certain cases.

3. Funding fee calculation

3.1 The formula for calculating the rate that you receive or pay is as follows:

Funding fee = position value × funding rate

The value of your position has nothing to do with leverage and is not determined by the amount of margin allocated to that position.

3.2 The formula for calculating the funding rate is as follows:

Funding rate = average premium index (P) + clamp{rate index (I)−average premium index (P), -0.05%, 0.05%}

Where the interest rate index I = 0.01%, the average premium index P is the simple average of the premium indices, and the premium index reflects the premium relationship between the futures price and the spot index price, with the specific formula as follows:

Premium index = [Max(0, impact bid price - price index ) - max(0, price index - impact ask price)] ÷ price index

The premium index is calculated every minute.

Impact bid and ask prices

Impact bid price = the average fill price to execute the Impact Margin Notional on the bid side.

Impact ask price = the average fill price to execute the Impact Margin Notional on the ask side.

Impact Margin Notional

Impact Margin Notional is the notion available to trade with 200 USDT worth of margin.

The specific formula is as follows:

Impact Margin Notional = 200 USDT ÷ minimum maintenance margin ratio

Example: the minimum maintenance margin ratio for BTCUSDT is 0.5%.

Impact Margin Notional for BTCUSDT = 200 USDT ÷ 0.5% = 40,000 USDT

4. Factors for calculating funding fees

Calculating funding fees involves multiple factors, such as futures prices and market supply and demand. It is calculated on a regular basis and then exchanged between long and short position holders.

It is important for traders to understand the characteristics and effects of funding fees:

1) Risk management: Consider how funding fee affects the cost of a position and develop sensible trading strategies.

2) Market analysis: Funding fees can be used as a reference to determine market trends and volatility.

3) Futures pairs selection: Choose the trading tool suited to your strategy based on the funding fees of different futures pairs.

However, funding fees are not entirely stable and are influenced by factors like market volatility and trading activity. Traders should closely monitor the market situation to adjust their trading strategies.

In conclusion, funding fee is an essential factor in trading. A deep understanding of its principles and effects is crucial for successful trading and investing.

5. Disclaimer

Cryptocurrencies are subject to high market risk and volatility despite high growth potential. Users are advised to conduct their own research and invest at their own discretion. Bitget shall not be liable for any investment losses.