What does maker and taker fee mean and how can I benefit from it? If you asked yourself this question, then we have the answer you were looking for. In this guide, we go over the maker/taker fee structure, its benefits and how it differs from spreads. We also provide brief information regarding fee levels in platforms that implement them.
What is Maker and Taker Fees?
Maker and taker fees are costs dedicated for trading cryptocurrencies and differ in terms of order type. As noticed, there are two types of investment that carry different fee structure. These are maker (when trade adds to the platform’s liquidity) and taker orders (when traders take out the liquidity from the platform).
Maker orders do not close immediately but rather linger in due to price limits. Thus, they “make” the market, keeping it active. Takers file out immediately, “taking” the value out of the market. Thus, maker fees that activate the market and keep it that way usually come with reward of low fees. Takers charge regular trading costs, most of the time.
The order book keeps all transactions as records within the market. In that way, traders can see just how active the website is and can track down trends. It can contain order size, value price of the crypto and time released. You can check out the example of the order book in a snapshot below. The buy and sell price differences is called value spread, which we will cover in next section of this article.
Platforms that manage their own volumes for trade usually implement maker/taker cost program. Through them, the company hopes to keep liquidity high enough to attract new customers and keep old ones.
How do They Differ from Spreads
Spreads are simple differences between buy and sell value for the cryptocurrency. They are not costs per say but they do have implications for traders to consider. If spread stands at 1.5%, it would mean that it goes both ways. With no other costs to account for, spreads become the main source of income for platforms.
As for traders, they have to catch quite large fluctuations in price value, which is not the case with fees. Maker/taker fees account for any sort of price change, allowing a trader to make a profit even from smallest price fluctuations. Spreads, however, do not, a trader needs to pass the upper/lower price limit to actually make a profit.
Benefits for Traders
Without further ado, let’s take a look at few advantages that maker/taker fees have for traders:
– Allow for any size of profit to occur, no matter how large or small.
– Help trading platform keeps their liquidity and, through them, the stability of the market.
– Many platforms design different levels of maker/taker fees according to the volume traded.
– Maker fees are usually very low or even have reimbursements for investors.
Platforms with Maker/Taker Fees
Bitfinex – This platform employs a maker/taker fee structure according to the value traded. With higher value during the month (30 days) the lower fee would apply for the order. Taker costs range from 0.20% down to 0.055%, as seen in a snapshot below. However, maker fees can go from 0.1% down to 0% with sufficient value traded. Read more about this platform in our Bitfinex review.
Kraken – This trading platform offers much the same program expect it uses volumes, instead of value. It serves as an example of how different marketplaces can use different metrics, depending on what they are after – value or volume. Taker fees range from 0.26% to 0.10% while maker fees go between 0.16% and 0%. Read more about this platform in our Kraken review.
BitMEX – Lastly, BitMEX has its own program for maker and taker fee structure. The company offers reimbursements for order types, rather than value or column traded. Thus, maker fees for leveraged orders range from -0.025% to -0.050%. Taker fees work between 0.075% and 0.025%, depending on the cryptocurrency and type of contract. You can check out the details in a picture below. Read more about this trading platform in our BitMEX review.
In this article, we answered the question: what do maker and taker fee means and how can I benefit from it? In terms of benefits, maker/taker fees provide an opportunity for traders to earn as little as possible and incur smaller losses than with spreads. Furthermore, the fee program helps marketplace keep liquidity and traders a place to invest.
To complement knowledge, we would recommend our readers to check out our articles about platforms with the lowest deposit and trade fees.