> For the complete documentation index, see [llms.txt](https://docs.helixapp.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.helixapp.com/trading/funding-rates.md). # Funding Rates While margin trading unlocks the door to amplified gains, it also introduces another layer of complexity - funding requirements. Often overshadowed by margin requirements, understanding funding rates is crucial for responsible leveraged trading on Helix. ### **What are Funding Rates?** In traditional futures contracts, the price on the exchange converges with the spot price over time. In contrast, perpetual futures on Helix never expire, creating a potential disconnect between the contract price and the underlying asset's spot price. To keep these prices in sync, a mechanism called funding payments kicks in. Funding rates are periodic fees exchanged between long and short positions. The direction of these payments depends on the prevailing market sentiment: * **Positive Funding Rates:** If a significant majority of traders are long, those long positions pay funding fees to short positions. This incentivizes trading activity that could potentially bring the contract price down towards the spot price. * **Negative Funding Rates:** When funding is negative, shorts pay longs. This encourages trading activity that could potentially push the contract price up towards the spot price. The specific calculation of funding rates is a formula that considers the difference between the contract price and the index price (a reference point representing the spot price), along with an interest rate component. While these rates may seem small at first glance, they can accumulate over time and significantly impact your trading experience. For **long position holders**, positive funding rates represent an additional cost. You'll be paying funding fees to short positions on each funding interval. Conversely, negative funding rates translate to receiving payments, essentially earning passive income on your open position. For **short position holders**, the funding dynamic flips. Positive funding rates become a source of income, while negative funding rates translate to periodic payments you owe to long positions. Therefore, it's crucial to factor potential funding costs into your margin calculations and risk management strategies. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.helixapp.com/trading/funding-rates.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.