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Funding Rate

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Description

In perpetual futures or CFDs, a periodic payment either from long to short traders or vice versa to ensure the contract price aligns with the spot market.

In perpetual futures or CFDs, the funding rate is a periodic payment mechanism to ensure the contract price stays aligned with the spot market price. It can involve payments from long to short positions or vice versa, depending on whether the market is in contango or backwardation. This rate affects trading costs and strategies, particularly in markets where positions are held over long periods.

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