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Trade Crypto Futures: How Much Does it Cost?

2021-06-23

Key Takeaways:

  1. Transaction costs and related expenses add up over time and significantly impact your long-term returns.

  2. Maker fees are paid when you add liquidity to the order book, while taker fees are paid when you remove liquidity from the order book. 

  3. Maker fees are generally less expensive than taker fees. 

  4. Paying close attention to transaction fees and liquidity in a market can help traders set up more successful trades that provide desired results between maker and taker fees. 

Futures trading is a wonderful way to gain exposure to cryptocurrencies without having to hold the underlying asset. But before you jump in, you should take a look at what it takes to get started and some of the hurdles you’ll need to account for along the way.

Crypto derivatives are certainly more inclusive and available than traditional futures contracts. Traders can often buy and sell digital assets at significantly smaller amounts and don’t have to be an accredited investor to participate. Although all of these features are great, crypto exchanges and trading platforms have fees that investors must incur.

What Are Trading Fees?

An inevitable part of trading cryptocurrencies is the fees that exchanges implement to maintain operations and give rebates to liquidity providers for participating in markets. The fees occur at every point of transaction when traders purchase, sell, and even convert crypto derivatives.

Types of Trading Fees You Should Know About

Traders may encounter two types of fees trading fees on crypto derivatives exchanges like Binance Futures, which include Maker and Taker fees. These fees would be incurred by traders depending on whether they are providing liquidity and therefore increasing the depth of the order book (makers) or if they are taking this liquidity on (takers). 

Maker and taker fees are also referred to as payment for order flow.

Maker Fees

Maker fees are paid when traders add liquidity to the order book by placing a limit order below or above the market price. Increasing the size of the order book is good for the exchange and market participants. 

These types of fees are generally lower than taker fees. Makers usually trade at high frequencies to execute strategies to profit by providing liquidity to other traders and gaining the ask/bid spread.

Taker Fees

On the other hand, taker fees are paid when traders remove liquidity from the order book by placing market orders. As such, taker fees are generally more expensive than maker fees. 

Market players that act as takers can be hedge funds that want to make profits from short-term price changes. They can also be larger investment firms that want to buy high volumes of contracts for immediate execution.

How Trading Fees Impact Your Returns?

Trading fees can impact your returns depending on how entry and exit orders are executed. As we will explore below, maker fees are less expensive and, in some cases, can earn an investor a rebate. 

Even a small transaction fee coupled with other related expenses such as funding fees can add up over time. As the trading costs accumulate, a portfolio’s return can be significantly reduced. 

For instance, if your portfolio was up 20% for the year, but you paid 2% in fees and other trading expenses, your return would be only 18%, and that difference can add up over time. 

Binance Futures Fee Structure 

Across most of the crypto exchanges out there, Binance Futures has one of the lowest fee structures. 

Indeed, Binance Futures’ taker fee rates start at 0.04% and can go as low as 0.017%. Maker fee rates, on the other hand, start at 0.02% and can go as low as 0.0000%. 

To trade at the lowest fee rates of either taker or maker rates on Binance Futures, users have a 30-day trade volume of more than or equal to 750,000 BTC and more than or equal to 11,000 BNB. But just getting started requires a 30-day trade volume of 250 BTC or less and doesn’t require BNB.

Level

30d Trade Volume (BUSD)

and/or

BNB Balance

USDT

Maker / Taker

USDT Maker/Taker

BNB 10% off

BUSD

Maker / Taker

BUSD Maker/Taker

BNB 10% off

VIP 0

< 15,000,000 BUSD

or

≥ 0 BNB

0.0200%/0.0400%

0.0180%/0.0360%

-0.0100%/0.0230%

-0.0100%/0.0207%

VIP 1

≥ 15,000,000 BUSD

and

≥ 25 BNB

0.0160%/0.0400%

0.0144%/0.0360%

-0.0100%/0.0230%

-0.0100%/0.0207%

VIP 2

≥ 50,000,000 BUSD

and

≥ 100 BNB

0.0140%/0.0350%

0.0126%/0.0315%

-0.0100%/0.0230%

-0.0100%/0.0207%

VIP 3

≥ 100,000,000 BUSD

and

≥ 250 BNB

0.0120%/0.0320%

0.0108%/0.0288%

-0.0100%/0.0230%

-0.0100%/0.0207%

VIP 4

≥ 600,000,000 BUSD

and

≥ 500 BNB

0.0100%/0.0300%

0.0090%/0.0270%

-0.0100%/0.0230%

-0.0100%/0.0207%

VIP 5

≥ 1,000,000,000 BUSD

and

≥ 1,000 BNB

0.0080%/0.0270%

0.0072%/0.0243%

-0.0100%/0.0230%

-0.0100%/0.0207%

VIP 6

≥ 2,500,000,000 BUSD

and

≥ 1,750 BNB

0.0060%/0.0250%

0.0054%/0.0225%

-0.0100%/0.0230%

-0.0100%/0.0207%

VIP 7

≥ 5,000,000,000 BUSD

and

≥ 3,000 BNB

0.0040%/0.0220%

0.0036%/0.0198%

-0.0100%/0.0230%

-0.0100%/0.0207%

VIP 8

≥ 12,500,000,000 BUSD

and

≥ 4,500 BNB

0.0020%/0.0200%

0.0018%/0.0180%

-0.0100%/0.0230%

-0.0100%/0.0207%

VIP 9

≥ 25,000,000,000 BUSD

and

≥ 5,500 BNB

0.0000%/0.0170%

0.0000%/0.0153%

-0.0100%/0.0230%

-0.0100%/0.0207%

More information on Binance Futures’ fee structure can be found on our support page.

Compared to taker fees of other main competing exchanges, only a few offer an equally low initial taker fee rate of 0.04% while all other exchanges are higher. Binance Futures also implements an initial maker fee rate that is quite competitive compared with other players in the market.

Calculating Binance Trading Fees 

On Binance Futures, users can calculate their trading fees with just a few values, including their entry and exit prices, contract quantity, and fee rate. 

The equation is calculated as follows:

  • Fee to Open = (Contract Quantity x Entry Price) x Trading Fee Rate

  • Fee to Close = (Contract Quantity x Exit Price) x Trading Fee Rate

If you were to enter a long position for 1 BTCUSDT contract at $40,000 and wanted to close the position at $40,500, with the taker fee rate set at 0.04%, and the maker fee rate was set at 0.02%, the various fee totals would come out to the following.

Fee to Open (USDT)

Fee to Close (USDT)

Net Fee (USDT)

Taker: 16 USDT

Taker: 16.2 USDT

Fee Paid: 32.2 USDT

Taker: 16 USDT

Maker: 8.1 USDT

Fee Paid: 24.1 USDT

Maker: 8 USDT

Maker: 8.1 USDT

Fee Paid: 16.1 USDT

Maker: 8 USDT

Taker: 16.2 USDT

Fee Paid: 24.2 USDT

Using the aforementioned equations, traders can better determine where they want to open and close trades to avoid higher fee rates. 

When both entry and exit orders are executed as maker orders (as in the example), trades will be privy to the lowest fee of 16.1 USDT. When both maker and taker orders are executed, the result is always a lower fee than that of a double taker order. Traders would be obligated to a 32.2 USDT fee if both the entry and exit orders were executed as taker orders.

Between all-taker-orders and all-maker-orders is a 16.1 USDT difference. In other words, all-taker-orders execution would double the cost of an all-maker-orders execution. 

Traders must aim for maker orders to minimize any losses to fees.

Conclusion

Paying close attention to fee rates and liquidity in a market can help traders set up more successful trades that provide desired results between maker and taker fees. It is also crucial to choose the right crypto derivatives exchange that provides very low fee rates. This strategy can help eliminate any surprises traders could fall victim to when trading crypto derivatives for the first time.

Binance Futures is a great place to start trading crypto derivatives because it has some of the lowest taker fees offered amongst exchanges. 

Read the following helpful articles for more information about Binance Futures