Jan 10, 2022
Things to Know About Maker and Taker Fees in Crypto Trading
Cryptocurrency trading is a new and exciting way to invest in the future. Many aspects of cryptocurrency trading can be confusing for beginners, but Bybit maker and taker fees shouldn’t be one of them! In this blog post, we will go over things you should know about these two types of fees so that you can get started with your cryptocurrency investment safely with confidence.
What Are Maker and Taker Fees In Crypto Trading?
Maker fees are paid to the market makers who provide liquidity by placing limit orders on both sides of an order book. Market takers do not make markets; they execute limit orders placed by these market makers at the best available price (i.e., the lowest priced sell order that will complete a buy order or vice versa).
Taker fees are paid to the market takers who take liquidity away from an order book by placing orders that immediately get filled up. Market makers provide this liquidity, but they are not obligated to do so at all times unless they have explicitly agreed to quote a price for their counterparty. For example, if there is no sell order available at the price you are looking to transact, you will pay a taker fee for taking liquidity away from the order book.
Why Is It Important To Know the Difference?
Knowing the difference between maker and taker fees is important because it can impact your bottom line. Generally, market makers receive a lower fee than market takers. This is because they provide a service to the community by adding liquidity to the order book. Taker fees tend to be higher because taking liquidity away from an order book is more complex and usually more costly for the market takers. These fees can be compounded by trading on a platform that charges both types of expenses, such as Binance or Coinbase Pro (formerly GDAX).
How Does This Affect Your Trade?
When you are considering a trade, it’s essential to consider the fees that will be charged on both sides of the transaction. For example, if you are looking to buy Bitcoin with Ethereum, and the exchange you are using charges a taker fee of 0.25%, you would need to find an order where the price is at least 0.25% higher than the price you are willing to pay to cover the fee. On top of this, it’s crucial for beginners who do not have experience trading cryptocurrencies and crypto-assets yet to know that different trading pairs have different trading dynamics.
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