Start with payment direction
Hyperliquid funding settles every hour. Positive funding means longs pay shorts; negative funding means shorts pay longs. The payment uses position size, oracle price, and the funding rate. Identify the receive side before annualizing anything.
APR is only a comparison tool
Annualizing one hourly observation makes markets easier to compare, but it can imply persistence that does not exist. Keep the actual hourly rate beside the APR and review several intervals. Funding is peer-to-peer; it is not protocol yield guaranteed to continue.
Calculate expected dollars
Convert the rate into the payment for the intended oracle notional. At $10,000 notional, 0.01% for one hour is $1 before trading fees, slippage, basis movement, and price PnL. This makes it easier to reject routes whose execution cost consumes the carry.
Wallet size changes everything
Position size should come from wallet risk capacity, not from the highest displayed APR. Check account value, withdrawable balance, margin headroom, existing directional exposure, and how much an adverse move would cost before the next few payments arrive.
Neutrality must be verified
A perp leg that receives funding may still leave directional risk if its hedge differs in notional, venue, asset, or execution timing. Include spot and correlated positions when deciding whether the wallet is actually neutral.
Timing can erase the trade
Late entries, spread expansion, and funding flips can turn attractive APR into noise. State an invalidation condition before entry: a minimum net rate, maximum spread, margin floor, or maximum distance from the observed price.