Funding Rates vs Trading Fees: What Matters More?

Futures traders pay two types of costs: trading fees and funding. Fees are paid on entry and exit. Funding is paid between longs and shorts to keep perpetual prices aligned with spot. Which matters more depends on holding time.

Trading fees are immediate

Fees are charged on every trade. If you scalp or day trade, fees can be the largest cost. Maker orders reduce this but may not fill in fast markets.

Funding matters for longer holds

Funding is usually paid every eight hours. If you hold positions for days, a high funding rate can erase profits. During crowded long or short phases, funding can spike.

How to reduce both costs

• Use maker orders when speed is not critical.
• Avoid holding during extreme funding spikes.
• Consider lower leverage to reduce liquidation pressure.
• Track your fee totals in a trading journal.

Real-world cost comparison

Consider a $50,000 BTC long position held for 3 days. Trading fees (taker): $50,000 × 0.055% × 2 = $55 round trip. Funding (assuming 0.01% per 8h): $50,000 × 0.01% × 9 periods = $45. In this scenario, fees and funding are comparable. But if funding spikes to 0.05% during a rally, the 3-day funding cost jumps to $225 — four times the trading fee. This is why monitoring funding rates is critical for swing traders.

Costs are part of risk. Use the calculator to include fees in your position size and avoid surprises.