Funding flips
The #1 way funding trades die: the rate changes sign after you enter, and the position starts paying instead of collecting.
What a flip is
Funding is recomputed every interval from live positioning. The +0.3% /8h you entered against is not a contract term — it is the last print. When the crowd that produced it unwinds, the rate drifts to zero and through it. Sign change on either leg is a flip: the leg that paid you now charges you.
In a two-leg perp trade both rates can flip. A spread of +0.32 - (-0.21) = 0.53% can go to -0.05 - (+0.02) = -0.07% within a few settlements — the position quietly becomes a paying one, while the price hedge still holds and nothing looks “wrong” on the P&L until you check the funding column.
Why it is the #1 killer
- It is silent. No liquidation, no alert from the venue. The trade just starts bleeding at every settlement.
- It is common. Extreme rates attract exactly the arbitrage flow that normalizes them. The wider the print, the faster the mean reversion, on average.
- Exit costs are fixed. Closing pays the same fees and slippage whether the trade collected ten intervals or one. A flip after one interval usually means a net loss.
Early filters ARBHUB gives you
- Persistence (7d sign-hold) on the Spread page: what fraction of the last 7 days each leg’s rate held its current sign. A rate that has been positive for 95% of a week is a different bet than one that flipped four times yesterday.
- Stability (avgFr8 / sigma8): the mean 8h rate against its volatility. High mean, low sigma is carry; high mean, high sigma is a coin toss with a good last print.
- Funding-history chart: per-leg rates over 24h/3d/7d, with the spread overlaid. One glance answers “is this edge structural or a one-print spike?”
- Trend arrows in the matrix cells: the direction the current interval’s prediction is moving, before it locks.
Managing an open position
Decide the exit rule before entry: how many negative settlements you tolerate before closing. Funding pays on a schedule, so check the position around settlements, not continuously. And treat a flip on the larger-interval leg most seriously — an 8h leg that flips wipes out what eight 1h settlements of the other leg collect.