Did you know that cutting crypto trading fees can save an average trader hundreds or even thousands of dollars each year?
It’s true—those small fees and tiny coin fractions add up quickly!
What if you could keep more of your earnings in your own wallet instead of paying them out to exchanges?
Welcome to our guide on “How to Reduce Crypto Trading Fees on Exchanges.”
Whether you’re a seasoned trader or a newcomer, learning to minimize crypto trading fees can significantly impact your profitability.
In this post, you’ll discover effective strategies and tips to help you trade more efficiently and cost-effectively.
IMPORTANT: I've selected some really great blog posts that I think you'll absolutely love. They're waiting for you right at the bottom of this post. Don't forget to give them a read!Types of Fees
Various types of fees are associated with cryptocurrency trading:
- Trading Fees: These fees are standard and are levied each time a trade is executed. Typically, they constitute a small percentage of the trade amount.
- Maker and Taker Fees: Trading fees are often categorized into two types:
- Maker Fees: Charged to liquidity providers who place limit orders, thereby adding liquidity to the market. Makers initiate buy or sell orders that do not immediately match existing orders.
- Taker Fees: Incurred by traders who execute market orders, thereby removing liquidity from the market. Takers fulfill existing buy or sell orders already listed on the exchange.
Tips for Reducing Crypto Trading Fees on Exchanges
Here are some tips and tricks to help you reduce your crypto trading fees.
1. Choose the Right Exchange
To reduce crypto trading fees, the first and most important step is selecting the appropriate exchange.
Crypto exchanges differ significantly, especially in their fee structures.
Before registering on any exchange, thoroughly review their fee schedules. Most exchanges provide a detailed fees page that outlines trading fees and any additional charges.
By choosing the right exchange carefully, you can greatly reduce your trading fees, allowing you to retain more of your profits.
Therefore, opt for a crypto exchange with low fees, but also consider the exchange’s reputation.
Read Also: How to Choose the Best Crypto Exchange for Your Needs
2. Increase Your Trading Volume
To reduce your crypto trading fees effectively, consider increasing your trading volume.
Many exchanges use a tiered fee structure where fees decrease as your trading activity rises over a specified period, typically 30 days.
Check the screenshot from Gate.io below.
This structure favors traders who make frequent or larger transactions.
By increasing your trading volume, you can lower the percentage of fees you pay.
Check the fee schedule of your chosen exchange to understand the specific volume thresholds and corresponding fee reductions.
By carefully increasing your trading volume, you can enjoy reduced fees and retain more of your profits.
3. Use Exchange Tokens
Another effective strategy to lower your cryptocurrency trading fees is to take advantage of exchange tokens.
Several major exchanges have their own tokens, and holding or using these tokens can provide considerable discounts on trading fees.
Here’s how this usually operates:
- Holding Requirements: Certain exchanges provide tiered discounts based on the quantity of their tokens you possess. The more tokens you hold, the greater the discount you receive.
- Paying Fees with Tokens: Many exchanges enable you to use their token to pay for trading fees at a reduced rate. For instance, Binance users can pay fees using BNB and receive up to a 25% discount.
By paying crypto trading fees with exchange tokens, you can benefit from significant discounts and reduce your overall trading expenses.
4. Opt for Limit Orders Over Market Orders
A simple yet effective way to reduce crypto trading fees is by using limit orders instead of market orders.
Knowing the difference between these two order types can help you save money and trade more strategically.
Difference Between Limit and Market Orders
- Market Orders: When you place a market order, you are instructing the exchange to buy or sell a cryptocurrency immediately at the current market price. This type of order is executed quickly and guarantees the transaction, but it often comes with higher fees.
- Limit Orders: Conversely, a limit order allows you to set the price at which you want to buy or sell. The order will only be executed if the market reaches your specified price. This type of order gives you greater control over your trades and can lead to lower fees.
Maker vs. Taker Fees
Many exchanges utilize a maker-taker fee structure to determine crypto trading costs as can be seen from the screenshots above:
- Maker Fees: When you place a limit order that isn’t immediately matched with an existing order, you contribute liquidity to the market. This action makes you a “maker,” and exchanges often reward makers with lower fees to encourage liquidity.
- Taker Fees: When you place a market order or a limit order that matches immediately with an existing order, you reduce liquidity from the market. This action makes you a “taker,” and takers generally pay higher fees.
By opting for limit orders, you are more likely to be a maker rather than a taker, which can help you reduce your crypto trading fees.
Additional Resources:
- Understanding Maker vs. Taker Fees
- 7 Common Mistakes Crypto Investors and Traders Make
- Common Mistakes to Avoid When Using Crypto Exchanges
- The Role of Liquidity in Crypto Trading
- Crypto Trading Strategies for Different Market Conditions
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DISCLAIMER:
The information provided here is intended for informational purposes only and should not be solely relied upon for making investment decisions. It does not constitute financial, tax, legal, or accounting advice. Additionally, I strongly recommend that you only invest in cryptocurrency an amount you are comfortable with potentially losing temporarily.