Why backtests miss it
Chart-based backtesters see only price. A strategy that held longs through 2021's positive funding looked fine on the chart and paid out a large share of its gains in funding.
glossary
Funding rate
Perpetual futures never expire, so the exchange charges a periodic payment to pull the contract back to spot. Over a long hold it is often the biggest cost a backtest forgets.
A funding rate is a periodic payment, typically every 8 hours on Binance, exchanged between long and short positions in a perpetual futures contract to keep the contract's price close to the underlying spot price. When the rate is positive, longs pay shorts; when negative, shorts pay longs. It is a cash flow on the position, not a fee to the exchange, and an honest backtest must charge the actual historical rate at each funding timestamp.
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How OptAlgo charges it
The exact rate from the exchange's funding history, at every timestamp the position was open, shown as its own cost line in the result. The honesty grade drops if funding history was missing for part of the run.
Trading it
Some strategies earn funding by holding the paid side, hedged on spot. OptAlgo can backtest spot and perpetual legs together so the funding income and the hedge cost are both real.
faq
Funding rate FAQ
Is funding a fee?
No. It is a transfer between traders. You can receive it as well as pay it, which is why a backtest must use the signed historical rate, not an average.
Does spot have funding?
No. Only perpetual futures. In OptAlgo, BTCUSDT.P is the perpetual and BTCUSDT is spot.