Here's a true story: I have a trading buddy that I've been following for a long time, and his Technical Analysis skills are top-notch. However, he almost got caught out by the funding rate. You read that right, it wasn't Get Liquidated, but rather his profits were "slowly eaten away" by the funding fees.

What the heck is this thing? In simple terms, it's a "balancing mechanism" created by the perpetual contract market to prevent contract prices from deviating too far from spot prices. Bulls and bears will periodically transfer funds to each other — that's right, your counterpart might be paying you or deducting money from your account.

The operational logic is actually not complicated:
When the market is crazily bullish and the contract price is driven up, the funding rate becomes positive. At this time, those who go long have to pay those who go short, essentially paying for their own optimistic sentiment. Conversely, in a bear market, when the contract price falls below the spot price, the rate turns negative, and shorts have to shove money into the accounts of longs.

This money is not earned by the exchange (many people misunderstand this point), but is a direct transfer between traders. The funding rate is settled every 8 hours, which seems insignificant, but when holding positions for the long term, it accumulates to a considerable amount. My brother was holding a long position with a high funding rate, and as a result, the market didn't move, and he lost seven or eight points just from the funding rate.

So, before opening a contract, take a glance at the funding rate, especially for positions you plan to hold overnight. Sometimes, giving up a direction isn't due to a wrong judgment, but purely because the funding rate is working against you. Don't let this "invisible cost" eat into your profits; that would be really unfair.