There are hundreds of different entities on the cryptocurrency market that offer the possibility of trading cryptocurrencies. When trading cryptocurrencies with the help of exchanges and exchange offices, it is necessary to pay fees for transactions made. Today we will go through several types of commissions charged by exchanges on the example of margin trading platforms. In this case, it will be helpful Geco.one and BitMEX.
Commissions in Margin Trading
Most investors will sooner or later encounter maker and taker commissions.
The maker commission is charged in a specific case. When you create a new order that will not be filled immediately – it goes to the orderbook. When someone completes them, then they have to pay the maker commission. In this situation, you are a so-called market liquidity provider (maker).
The taker commission is the opposite of the maker commission. In this situation, the issued order automatically fills in another, already existing one. You are incurring the cost of being a “taker” of liquidity in the market.
In the case of margin trading, we can often also talk about fees for maintaining a position. This is usually related to the fact that margin trading is focused on a short-term investment – therefore, a longer period of maintaining a position involves an additional fee. The time frame and fee amount varies between platforms.
Maker and taker commissions work in relation to an orderbook existing on the exchange. Some trading platforms, however, give up this solution in favor of an external liquidity provider. This useful solution allows, above all, to avoid dangerous price slips – we are sure that our order will be closed at the price we have set.
Margin trading commissions on various platforms
An example of a margin trading exchange with an order book is BitMEX. By viewing the table commission, we can see the functioning of both the maker and taker commission, but also the maintenance fee (Funding Interval).
As we can see, BitMEX “rewards” the provision of market liquidity – the Maker commission is much lower than Taker. Adding up these commissions, we can see that each time we pay for both commissions, the cost of 0.1% of the value of our transaction. To this, we must add the commission charged every 8 hours for maintaining the position in the amount of 0.0731%. However, this commission only applies to Bitcoin. If we want to invest in other cryptocurrencies, we will have to take into account that we will incur even higher costs. Stellar (XML) reaches a record value here. In this case, the cost is as much as 0.3781%.
Little the situation is different in the case of Geco.one. Here we are not dealing with an orderbook – therefore, instead of a maker and taker fee, fees for opening and closing positions are charged. In both cases we deal with a commission of 0.04%. In addition, a Settlement Fee is charged every 24 hours for holding a position – this fee is only (compared to the BitMEX fee charged every 8 hours) 0.01%. Importantly – the rate is the same for all couples.
Native tokens lower the commission
Many trading platforms allow you to lower your commission by using your native tokens. Currently, the largest native token is Binance Coin, which allows you to limit transaction fees on Binance. Its price may, however, be a deterrent.
Going back to the examples above, Geco.one also allows you to lower fees with its token. GeCoin reduces the commission for opening and closing a position by 20% each time.