Understanding how fees work on trading platforms is crucial for managing your investment costs and maximizing potential returns. This guide offers a detailed look into the fee structure used by one prominent derivatives exchange, explaining how costs are applied and strategies to manage them.
How Fees Are Structured
Fees on this platform are divided into two primary types: Maker fees and Taker fees.
- Maker Fee: This fee applies when you add liquidity to the order book by placing an order that isn't immediately matched with an existing one. Essentially, you are "making" the market. As a reward for providing liquidity, you typically receive a rebate, meaning the fee is negative, and you gain a small amount.
- Taker Fee: This fee is charged when you remove liquidity by placing an order that is executed immediately against an existing order in the book. You are "taking" from the market, and a fee is applied for this action.
Understanding this distinction is the first step toward calculating your total trading costs accurately.
Detailed Fee Tiers and Rates
The specific rates you pay depend on your trading volume and VIP level. The standard starting rates are as follows:
- Taker Fee: The base rate is 0.075% of the trade value.
- Maker Fee: The base rebate is -0.025%, meaning you earn 0.025% on your order size.
These rates are not fixed. As your 30-day trading volume increases, you can progress through VIP tiers, which offer progressively lower fees and higher rebates.
- VIP 0: This is the default level with the standard rates (Taker: 0.075% / Maker: -0.025%).
- VIP 1 and Beyond: Higher tiers offer significantly reduced fees. At the highest levels, Taker fees can be as low as 0.01%, and Maker rebates can reach -0.05%.
It's essential to check the official fee schedule for the most current and detailed tier information to see how your activity translates into potential savings.
The Impact of Leverage on Fees
A key feature of this platform is the availability of high leverage. While leverage amplifies your buying power, it also magnifies the fees you pay. Fees are calculated based on the total notional value of your trade—the contract value before leverage is applied.
For example:
- A $1,000 trade with 10x leverage has a notional value of $10,000.
- The Taker fee would be calculated on the $10,000 amount.
- Therefore, your fee cost is magnified by the same factor as your position.
This makes understanding fee calculations critical when using leverage, as it directly impacts your break-even point and net profitability. 👉 Explore more strategies for managing trading costs
Real-World Fee Calculation Examples
Let's apply the standard rates to some practical scenarios to see how fees work in action.
Scenario 1: A Taker Trade
- You open a position with a notional value of 10,000 USD as a Taker.
- Your fee = 10,000 USD × 0.075% = 7.50 USD.
Scenario 2: A Maker Trade
- You place a limit order that adds liquidity to the book. The notional value is 10,000 USD.
- Your rebate = 10,000 USD × (-0.025%) = -2.50 USD. This is a credit, so you effectively earn 2.50 USD.
Scenario 3: A Leveraged Taker Trade
- You use 100x leverage on a 1,000 USD margin. The notional value is 100,000 USD.
- Your Taker fee = 100,000 USD × 0.075% = 75.00 USD.
These examples highlight how quickly fees can scale with leverage and trade size.
Other Important Cost Considerations
Beyond the standard Maker/Taker fees, traders should be aware of other potential costs.
- Funding Fees: For perpetual swap contracts, a funding fee is exchanged between long and short traders every eight hours. This fee is not paid to the platform but is a mechanism to tether the contract's price to the underlying spot market index. Its direction and rate depend on market conditions; if the rate is positive, longs pay shorts, and if negative, shorts pay longs.
- Fee Payment: All trading fees and funding fees are automatically deducted from your available account balance at the time of the trade or funding event.
Effective Strategies to Minimize Your Fees
Being mindful of your trading habits can lead to significant savings over time.
- Aim to Be a Maker: Whenever possible, use limit orders to become a Maker and earn a rebate instead of paying a fee. This requires patience and a sound order placement strategy.
- Monitor Your VIP Tier: Your 30-day trading volume determines your fee tier. If you are a high-volume trader, actively monitor your progress toward the next VIP level, as the reduced fees can substantially lower your costs.
- Factor In All Costs: Always include both trading fees and anticipated funding fees in your profit and loss calculations before entering a trade, especially for long-term positions.
Frequently Asked Questions
What is the difference between a Maker and a Taker?
A Maker adds an order to the book (like a limit order not immediately filled) and provides liquidity, earning a small rebate. A Taker removes liquidity by filling an existing order (like a market order) and pays a fee for the immediate execution.
How are funding fees different from trading fees?
Trading fees are paid to the exchange for executing a trade. Funding fees are periodic payments between traders in a perpetual swap market to maintain the contract's price alignment with the spot market; they are not collected by the exchange.
Can I avoid paying fees altogether?
You cannot avoid fees entirely, but you can optimize for them. By primarily acting as a Maker and earning rebates, you can offset the costs of any necessary Taker trades, effectively reducing your net fee expenditure.
Does using higher leverage affect my fee tier?
Yes, because your VIP tier is based on your total notional trading volume (trade size × leverage). Using higher leverage can help you achieve higher trading volumes faster, potentially qualifying you for better fee rates sooner.
Why did I pay a fee even though my trade was liquidated?
Liquidations are executed as market orders to close your position. These are considered Taker orders, and therefore the standard Taker fee is applied to the notional value of the liquidated position.
How often are funding fees charged?
Funding fees for perpetual swap contracts are typically calculated and exchanged every eight hours. The specific times and current funding rate are always displayed on the trading interface.
Final Thoughts
A clear understanding of the fee model is a fundamental component of successful trading. By knowing how Maker/Taker fees work, the impact of leverage, and the role of funding rates, you can make more informed decisions. Strategically using limit orders and aiming for higher VIP tiers are effective ways to manage costs and improve your overall trading performance.