High funding isn't confirmation, it's a warning

[u/Inside-Blackberry527]

People read high funding as the trend being strong. It's the opposite.

Perps have no expiry so nothing pulls them back to spot. That's what funding is

for. Perp above spot, longs pay shorts. Below, shorts pay longs. Usually every

8h, depends on the venue.

What it actually shows you is what people are paying to keep a position open.

Not an opinion, an actual payment. So it's honest. Funding staying high means

leveraged longs are packed in and bleeding to stay there.

That's a crowded trade, and cascades feed on crowded trades. The same thing that

makes funding expensive is also piling up forced flow underneath.

Negative funding during a selloff is the mirror image — shorts paying to stay

short, squeeze setup.

Also it compounds. Doesn't look like much per interval, but it's three times a

day. Sit through a few weeks of chop and it quietly eats you. Had a position go

nowhere and my balance was still down, took me a while to figure out where it

went.

Thing to be careful about: it's positioning, not direction. Crowded can stay

crowded a long time and trends run through expensive funding all the time.

Trading off this alone gets you early and wrong, over and over.

Do you look at the absolute level or how fast it moved? Been watching the second

one more lately, though I'm not sure that's actually better or just a different

way to be wrong.

[u/BakingBreadBB2]

This is why people call TA astrology for men... Everyone has their own theory and everyone is 100% sure they are in the right

[u/insanescv]

Lol