What is the purpose of funding_rate_threshold?

What Is the Purpose of funding_rate_threshold?

The funding_rate_threshold setting in MagicTradeBot defines the minimum positive funding rate a symbol must have to be eligible for Funding Farming.

This ensures the bot targets only profitable opportunities while filtering out low-yield or unprofitable trades.

🔹 How It Works

  1. Filters Symbols by Funding Rate

  2. Example: funding_rate_threshold: 0.03

    • Only symbols with a funding rate ≥ 3% are considered for trades
    • Symbols below this threshold are ignored

  3. Controls Trade Quality

  4. Higher thresholds → more selective, focusing on high-yield symbols

  5. Lower thresholds → broader selection, but some trades may have smaller or negligible funding profits

  6. Balances Risk and Reward

  7. High threshold → fewer trades, potentially higher yield per trade

  8. Low threshold → more trades, but possibly lower per-trade profitability

🔹 Practical Considerations

Funding Rate Threshold Effect on Trading
0.01 (1%) More trades, lower individual yield
0.03 (3%) Moderate trades, higher yield
0.05 (5%) Very selective, fewer trades, highest yield
  • Combine with max_symbols_to_pick to control how many of the top funding rate symbols the bot actually trades

🔹 Example Scenario

  • Eligible symbols and funding rates:
Symbol Funding Rate
BTCUSDT 0.035
ETHUSDT 0.028
SOLUSDT 0.031
ADAUSDT 0.025
  • funding_rate_threshold = 0.03
  • Eligible symbols: BTCUSDT (0.035) and SOLUSDT (0.031)
  • ETHUSDT and ADAUSDT are ignored due to insufficient funding rate

Result: Bot focuses on the most profitable symbols, reducing low-yield trades.

✅ Key Takeaways

  • Purpose: Ensure trades only occur on symbols with sufficiently positive funding rates
  • Higher threshold: Fewer, more profitable trades with selective filtering
  • Lower threshold: More trades with potentially lower funding profit per trade
  • Optimizing this setting is critical for maximizing Funding Farming returns

📎 Related Topics