Losing money even when you get the market right—this is not a joke, it's the reality of contract trading.

Yesterday, a friend complained that he was completely correct on the long side, but he closed his position just one day before the price skyrocketed. The reason was heartbreaking: his account was gradually drained by funding fees. Over four days, he was charged more than $1,000 in fees, and in the end, he had to admit defeat. Ironically, the day after he closed his position, the market started to surge.

This situation is all too common in perpetual contract trading. Many people either don't understand what funding fees are or know but don't take them seriously. The result is losing money due to the rules, not because of market judgment.

**What exactly are funding fees doing?**

Funding fees in perpetual contracts are part of a balancing system. When there are too many longs in the market and the contract price rises above the spot price, longs have to pay shorts; the same applies in reverse. This mechanism is used to pull the price back to reality.

It sounds fair, but in actual trading, the problem lies here:

If you're fully long and market sentiment is hot, the funding rate remains positive. Paid every 8 hours, ranging from a few tens to hundreds of dollars. Holding for three or five days, your principal gradually melts away like a frog in boiling water. Even with the correct direction, your account still turns red.

**How not to get wiped out by funding fees?**

**First tip**: Keep an eye on the rate data. If the funding rate exceeds 0.1% for two consecutive periods, it indicates the market is a bit frantic. Opening a large position at this time is like gambling on fees. It's better to wait until the sentiment cools down before entering.

**Second tip**: Don't always hold positions long-term. During high funding rate periods, especially avoid holding on. If you must hold, include the fee costs in your profit expectations—aiming for a 2% profit but losing 1% to fees makes no sense.

**Third tip**: Before a big trend arrives, funding rates often have already risen. This is actually a good time to reduce or shift positions, not to add.

In the contract game, rules can make you win or lose inexplicably. True experts are not just those who read K-line charts, but those who thoroughly understand the trading rules.