Binance Funding Rate - Inverted

前天

The Funding Rate Formula
-Binance uses this formula every 8 hours:
-Funding Rate = Premium Index + clamp(Interest Rate - Premium Index, -0.05%, +0.05%)
-Breaking this down:

Premium Index:
-Measures the difference between futures price and spot price
-Interest Rate: Fixed at 0.01% per 8 hours (0.03% daily)
-Clamp Function: Limits the adjustment to ±0.05%, preventing extreme swings

When futures trade above spot (bullish sentiment), the funding rate becomes positive and longs pay shorts. When futures trade below spot (bearish sentiment), it becomes negative and shorts pay longs. This mechanism keeps perpetual futures prices aligned with spot prices.

How to Read This Indicator

The Inverted Display:
-This indicator flips the traditional display to make it more intuitive:

-Green bars pointing up = Negative funding (shorts paying) = Bullish pressure
-Red bars pointing down = Positive funding (longs paying) = Bearish pressure

The Clamp Lines:
-Green line at bottom: Maximum positive funding (-0.06% inverted)
-Red line at top: Maximum negative funding (+0.04% inverted)
-When bars hit these lines and turn blue/orange, it signals extreme market positioning

Practical Trading Applications
1. Identifying Market Extremes
-Small bars (near zero): Balanced market
-Growing bars: Building directional bias
-Bars at clamp lines: Maximum pain for one side, potential reversal

2. Timing Entries/Exits
-Blue bars at bottom: Longs are capitulating, consider buying
-Orange bars at top: Shorts are capitulating, consider selling
-But remember: extremes can persist longer than expected

3. Managing Costs
Check the Data Window (hover over chart) for:
-Actual Funding %: What you'll pay/receive
-Cumulative Fund %: Total impact over your selected period
-If holding positions against the funding direction, you're paying fees 3 times daily

Optimal Usage
-Timeframe: Use 30-minute to 8-hour charts only
-30m: Most responsive to changes
-4h: Cleaner trends
-8h: Aligns with funding periods

Auto-Clamp Setting: Keep enabled - it automatically adjusts the clamp ranges for different timeframes

Risk Considerations
-Funding ≠ Price Direction: High funding doesn't guarantee immediate reversal
-Costs Accumulate: 0.01% three times daily = 10.95% annually
-Whipsaw Risk: Funding can reverse quickly during volatile periods
-Not Standalone: Always confirm with price action and volume

Simple Decision Framework
-Persistent red bars + holding longs = You're bleeding fees
-Persistent green bars + holding shorts = You're bleeding fees
-Bars hitting clamps = Extreme positioning, watch for reversal
-Bars crossing zero = Sentiment shifting

Data Window Values

To see detailed metrics:
-Move cursor over any candle
-Or press Alt+D (Windows) / Option+D (Mac) to open Data Window panel

Key values to monitor:
-Actual Funding %: Real rate (not inverted)
-Cumulative Fund %: Your P&L impact from funding
-Momentum: Rate of change in funding

Remember: This indicator shows market positioning extremes, not guaranteed reversal points. Extreme funding can persist during strong trends. Use it as one input among several for decision-making, not as a sole trading signal.

前天

版本注释

-Fixed alert messaging to align with inverted scale