How much is the overnight fee for AscendEX contracts?

AscendEX's overnight fee for perpetual contracts is calculated using the funding rate, contract size, and 8-hour funding interval, impacting position profitability and requiring strategic management.

Nov 27, 2024 at 11:56 pm

How Much is the Overnight Fee for AscendEX Contracts?

AscendEX, a leading cryptocurrency exchange, provides a user-friendly trading platform with various features, including perpetual contracts trading. Perpetual contracts, also known as inverse swaps, offer leverage to traders, allowing them to amplify their potential returns. However, these contracts come with an overnight fee, a financing cost paid by traders to hold their positions overnight. Understanding the overnight fee structure is essential for traders to manage their risk and optimize their trading strategies.

1. Calculating the Overnight Fee

The overnight fee for AscendEX contracts is calculated based on the following formula:

Overnight Fee = (Current Funding Rate * Contract Size) / 8

The current funding rate is a dynamic value that fluctuates based on supply and demand in the market. A positive funding rate indicates that more traders are betting on the price going up (long positions), leading to a higher fee for holding short positions. Conversely, a negative funding rate suggests a market bias towards short positions, resulting in a positive fee for holding long positions.

The contract size varies depending on the underlying asset. For example, the contract size for BTCUSDT perpetual contracts is 0.001 BTC.

2. Timing of the Overnight Fee

The overnight fee is deducted from your account at a specific time each day. The exact time varies depending on the underlying asset. For most perpetual contracts on AscendEX, the overnight fee is charged daily at 08:00 UTC.

3. Funding Interval and Reset

The funding interval represents the period over which the overnight fee is calculated. For AscendEX perpetual contracts, the funding interval is 8 hours. At the end of each funding interval, the funding rate resets to a new value based on the latest market conditions.

4. Impact of the Overnight Fee

The overnight fee has a significant impact on the profitability of holding a position overnight. If the funding rate is favorable to your position (positive for long positions or negative for short positions), you can earn a fee. However, if the funding rate is unfavorable, you will incur a fee, which can eat into your profits or exacerbate your losses.

5. Managing the Overnight Fee

To minimize the impact of the overnight fee, traders can adopt the following strategies:

• Close positions before the daily fee deduction time.
• If holding a position overnight, choose a contract with a low funding rate or take a position that benefits from the prevailing funding rate.
• Monitor the funding rate closely and adjust positions accordingly.

Conclusion

The overnight fee is an essential aspect of perpetual contract trading on AscendEX. Traders must have a thorough understanding of how the fee is calculated, the timing of its deduction, and its impact on their positions. By carefully considering the overnight fee, traders can optimize their trading strategies to minimize costs and maximize profits.