The Ultimate Cheat Sheet: Trading Fees Explained

Whether you’re on a spot or derivatives exchange, “trading fees” is a term you’ve likely come across. Despite its prevalence, it can sometimes be difficult to grasp.

How much trading fees do I pay? 

What exactly am I paying for? 

If you’ve ever asked yourself these questions, this article is for you. 

What are Trading Fees? 

Friend or foe, fees are a fundamental part of trading. Each cryptocurrency exchange adds a trading fee when customers buy, sell or exchange crypto or the contracts whereby crypto is the underlying asset. These “fees” can cut both ways. 

Tip: It pays (literally) to understand differences between the two. 

Makers and Takers: Explained 

Actors 

Within any crypto derivatives exchange, traders act as either makers or takers. Makers provide liquidity and increase market depth of the order book while takers seek and take liquidity off the order book. 

Tip: If you’re a market maker at Bybit, we reward you for providing liquidity and increasing market depth of the order book. 

Factors 

When it comes to determining whether or not an order is considered a “maker” or “taker”, the key lies in the immediacy of orders filled. Market Orders are always executed as taker orders but Limit Orders may be executed as maker or taker orders. This is not to say that Limit Orders are inherently special. They are simply the only order type that doesn’t trigger an immediate buy or sell; a Market Order is immediate. 

Maker Taker
Provides liquidity to order books Removes liquidity from order books 
Not filled immediately  Filled immediately 
Bybit Fee: -0.025% (Rebate) Bybit Fee: 0.075%

Tip: At Bybit, you can enable the post-only feature to ensure that limit orders are executed only as maker orders.

For more details, check out: What is Maker and Taker?

Calculating Trading Fees

Rates 

At Bybit, takers pay 0.075% while makers earn a 0.025% rebate. 

Formula 

This is where things could become a little technical but fear not! All you need to know is:  

  1. Entry & exit price
  2. Contract quantity 
  3. Fee rate 

Once you’re set, plug the relevant numbers into the following equations: 

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

Example 

Say you want to enter a long position of 100,000 BTCUSD contracts at $9,500 and plan to close the position at $9,600.

Factors needed to calculate your fees would then be: 

  • Entry price: $9,500
  • Exit Price: $9,600
  • Contract Quantity: 100,000
  • Taker Fee Rate: 0.075%
  • Maker Fee Rate: -0.025%

Using the equation we showed you earlier, the table below shows how much trading fee you’d have to pay under different scenarios.

Fee to Open (BTC) Fee to Close (BTC) Net Fee (BTC)
Taker: 0.00789 Taker: 0.00781 Fee Paid: 0.01570
Taker: 0.00789 Maker: -0.00260 Fee Paid: 0.00529
Maker: -0.00263 Maker: -0.00260 Fee Rebate: 0.00523
Maker: -0.00263 Taker: 0.00781 Fee Paid: 0.00518

In this case, if your entry and exit orders were both executed as taker orders, you would have paid the highest fee of 0.0157 BTC. However, if both orders are executed as maker orders, you would have received a rebate of 0.00523 BTC instead. 

Tip: Traders who really want to save on trading fees would want to be a “maker” if possible. Especially in a market that uses the maker/taker fee structure to reward “makers”. 

Bybit’s Trading Fee Structure 

Bybit offers maker rebates as a way to encourage more market making activities in order to provide better market depth as a result. 

The platform only makes a net trading fee of 0.05% per transaction from the taker and maker fees borne by traders: Which are amongst the lowest in the industry.  

Perpetual Contracts
*Entry Level Accounts

Platform Maker Fee Rate Taker Fee Rate Net Fee Accrued by Platform
Bybit -0.025% 0.075% 0.05%
BitMEX -0.025% 0.075% 0.05%
Kraken 0.02% 0.05% 0.07%
Binance 0.02% 0.04% 0.06%
Huobi 0.02% 0.04% 0.06%
OKEx 0.02% 0.05% 0.07%
FTX 0.00% 0.07% 0.07%

Source: Official figures from each exchange as of November 17, 2020

Spot trading fee rates are generally priced above 0.2%. These tend to be between 3-to-15x higher than that of perpetual contract trading.

Spot Trading

*Entry Level Accounts

Exchange Maker Fee Rate Taker Fee Rate Net Fee Accrued to Platform
Binance 0.1% 0.1% 0.2%
OKEx 0.1% 0.15% 0.25%
Huobi 0.2% 0.2% 0.4%
Kraken 0.16% 0.26% 0.42%
Gemini 0.1% 0.35% 0.45%
Coinbase 0.5% 0.5% 1%
Bitstamp 0.5% 0.5% 1%

Source: Official figures from each exchange as of November 17, 2020

Closing Tips 

Aside to habitually choosing to be market makers, there are other ways to reduce the amount of trading fees one would have to fork out in every trade. At Bybit, those incentives include discounts in the form of trading rebates. The Bybit Rewards Hub is filled with prizes for the taking, and the best part is — claiming one could be as easy as a social media “follow”.