Perpetual futures traders can lose equity even when underlying prices remain unchanged, as funding payments are calculated based on position exposure rather than collateral. This mechanism means that the effective cost of holding a leveraged position varies significantly depending on the size of the margin used.
In a hypothetical example involving SEI perpetual contracts, a $30 funding payment represents 0.75% of a $4,000 collateral base but only 0.375% of an $8,000 collateral base. Traders with smaller margins relative to their exposure face proportionally higher equity erosion from funding costs, highlighting the importance of understanding how leverage and collateral interact in perpetual markets.
Perpetual Traders Face Equity Erosion from Funding Costs Even When Prices Hold Flat
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