Funding cost is a recurring charge that can erode edge quickly. It matters most on held positions and on derivatives or perpetual contracts.
Who this is for
- Anyone who holds positions beyond intraday.
- Anyone trading products with periodic financing.
- Anyone comparing venues with different cost structures.
Prerequisites — Complete silver-path first (min.: market-order, slippage, active-management, position-sizing). Foundation: bronze-path.
In plain terms — Even if price does not move, you can pay to stay in a position. If you ignore it, theoretical profit becomes lower than actual profit.
Operational control
Monitor historical and expected funding before opening a position. Assess whether the trade has enough edge to cover carry cost. Compare venues and alternative instruments with more efficient funding. Include the cost in break-even and target calculations. Reduce holding time when funding becomes punitive.
Example — Long position on a perpetual with positive funding for longs. The strategy earns little on price but pays repeated funding. By optimising timing and venue you turn a marginal trade into a sustainable one.
Card
- Goal: include carry cost in net results.
- Key inputs: funding rate, position duration, notional.
- Warning sign: net P&L worse than expected on long holds.
- Typical mistake: ignoring funding in backtests.
- Practical action: dedicated monthly carry-cost report.
Gold path — Module: Professional execution. Part of gold-path.