All lessons
Funding carry: count what you keep
Receiving funding feels like income; what did the whole position cost?
Calculate an interval payment and compare it with the complete position result.
Funding transfers money between perpetual position holders under the venue's rules. In the cited venue's convention, a positive rate means longs pay shorts; a negative rate reverses the direction. A quoted rate is not a promised return.
For a linear contract, multiply the relevant position value by the interval rate. Convert a percentage to a decimal. The position value, rate and settlement schedule can change, so yesterday's receipt is not tomorrow's forecast.
A trader might combine spot and a short perpetual to reduce price direction. That creates two positions with fees, collateral requirements and possible basis changes. Funding can reverse while one leg becomes hard to close.
Record funding actually settled, both legs' marked gains or losses, borrowing and execution costs. Compare net results on the whole capital committed. Annualising one unusually high interval hides changing rates and tail risks.
Let’s work through it
- Check the current product's settlement convention.
- Calculate each payment with its actual notional and rate.
- Combine all position changes and costs before judging carry.
Let’s use numbers · hypothetical example
A fictional short with settlement notional 2,000 receives 0.02%: 2,000 × 0.0002 = 0.40. Three identical hypothetical intervals yield 1.20. If the combined positions lose 4.00 and fees cost 1.00, the total is 1.20 − 4.00 − 1.00 = −3.80.
Easy mistakes to watch for
- Treating a funding rate as a guaranteed yield.
- Ignoring margin on a directionally hedged position.
- Annualising one interval without varying rates.
Keep in mind
Intervals and eligibility differ by product and may change. A hedge can still face liquidation, venue failure or mismatched execution.
Your turn
Replace the final receipt with a 0.03% payment on notional 2,000. Recalculate the funding total and full net result.
A quick check before we move on
What is the example's total result?
- A profit of 1.20
- A guaranteed annual yield
- A loss of 3.80
Check answer
A loss of 3.80 The receipt of 1.20 is outweighed by 4.00 position loss and 1.00 fees, leaving −3.80.
Sources and further reading
Content reviewed: 29 October 2026
Educational material with hypothetical examples. Trading can cause substantial losses. A course, pattern, stop order or past result cannot guarantee a profit or limit every loss. Practise in simulation and check current rules and product terms in your jurisdiction.