Whenever you are trading with cryptocurrencies, there will be multiple different fees that you have to consider, with most of them being charged by exchanges. While you can avoid some of the fees, maker and takers fees are something that is really hard to avoid and almost every exchange charges them in order to fund their operations. These are trading fees and are charged based on if you are a maker or taker. But what exactly are these fees and who are the makers and takers? Learn more about it in our guide.
Maker and Taker fees in crypto trading
When you are trading on the crypto market, most cryptocurrency exchanges don’t have spreads, such as Forex and stocks might have. Therefore, these exchanges implement what’s called a maker/taker fee structure. This fee structure takes a look at whether you are a market maker or taker and charges you trading fees accordingly. Some exchanges might have the same fees for both makers and takers, but most exchanges charge makers less since they are the ones who provide liquidity. When visiting an exchange, you can navigate through their fees page, where most of them will have a table showing the exact maker and taker fees. One thing that’s really good with this structure is that, on most exchanges, the higher the amount that you trade, the lower the fees you have to pay. The impact of maker and taker fees on your crypto profits might appear insignificant, but they can also be a big deal. But what are the differences between makers and takers?
Market makers, also simply called makers, are the ones who create liquidity in the market, and ensure that trades are executed in a fast manner. Makers trade with limited orders, meaning that they don’t open and close trades at the current market price. A maker is a trader who places a limit order to either purchase or sell cryptocurrencies once they hit certain prices. With these orders, these traders create liquidity in the market. So if someone wants to buy or sell crypto at the current market price, there are these limit orders placed by makers allowing them to do so. What this means is that there is always someone who is willing to buy or sell that crypto at any price.
Takers are the complete opposite of makers. These are the traders who trade according to the current market price. These traders look at the market and open and close orders manually for the current market price. So let’s say a trader has an open position and wants to close it at the current price, he simply closes and sells his order for the current price, which is what makes him a taker. Since these traders are taking from the liquidity, they tend to pay a bit more in fees compared to the makers. That being said, there are some exchanges that charge the same fees to both. These fees are something that you can not avoid, so understanding maker and taker fees in crypto trading is very important.
FAQs on Maker and Taker fees
How can I avoid maker and taker fees?
Most of the exchanges have maker and takers fees, so avoiding them will not be an easy task. These exchanges usually have moving maker and taker fees, so the more you trade, the lower the fees you pay. Some exchanges even have a point when they don’t charge you at all, but usually, for that, you have to trade very large sums of money each month.