Understanding Funding Rates in Perpetual Contracts
OKEx's perpetual contracts use a funding rate mechanism to ensure contract prices track the underlying spot market. This system involves periodic payments between long and short position holders:
Key Components
- Funding Rate Calculation: Determined by premium/discount between contract price and spot index
- Payment Timing: Occurs every 8 hours (00:00, 08:00, and 16:00 UTC)
- Historical Rate Review: Available for analysis (e.g., 2019-07-15 to 2019-07-21 data shown in article)
Contract Trading Process on OKEx
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Step-by-Step Execution:
- Order Placement: Select contract type and leverage ratio
- Position Management: Monitor margin ratios and mark prices
- Funding Exchange: Automatic rate payments during settlement periods
Risk Management Factors
| Risk Type | Description | Mitigation Strategy |
|---|---|---|
| Funding Rate Volatility | Unexpected rate fluctuations | Monitor historical trends |
| Liquidation Risk | Margin call possibilities | Use proper leverage ratios |
| Price Discrepancy | Mark vs. last traded price | Understand index pricing |
Important Formulas:
Margin Ratio = (Fixed Margin + Unrealized P/L) × Average Entry Price × Leverage / (Contract Face Value × Position Size) - Adjustment FactorFAQ Section
Why do funding rates exist?
Funding rates help maintain price alignment between perpetual contracts and underlying spot markets by incentivizing traders to correct deviations.
How often are funding payments made?
Payments occur every 8 hours at 00:00, 08:00, and 16:00 UTC.
What determines the funding rate amount?
The rate depends on the premium/discount between contract prices and the spot index, with additional smoothing mechanisms.
Can funding rates be negative?
Yes, negative rates occur when shorts pay longs, indicating bearish market sentiment.
How does leverage affect funding payments?
While leverage amplifies position size, funding payments are calculated based on position value, not leverage amount.
👉 Advanced funding rate analysis techniques
Platform Security and Reliability
OKEx has maintained strong security protocols with:
- Regular system audits
- Robust infrastructure to prevent downtime
- Comprehensive insurance funds
Note: Last comprehensive update reviewed 2021 operational data
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