This post is also available in: Deutsch (German)
Knowing your fees
Nowadays it’s increasingly important for a trader to know and understand the fee structures of different leverage exchanges. It is not only the user interface, stability or security that matters, but also the fees paid on each and every trade. This plays a very big role in deciding which leverage trading platform you will end up using.
Sometimes crypto leverage exchanges have hidden fees that could really mess up your otherwise correct profit calculations. You would end up making a slightly incorrect profit by closing a position.
In this article, we will compare the fees for Deribit, Bitmex, PrimeXBT, and Bybit. As leaders in the crypto industry for leverage trading, these four platforms combine high-security standards with new and innovative products. Some even have a different take on leverage.
The effect on leverage trading platforms
They may seem insignificant at first, but it should always be remembered that in the long run, lower fees can have a significant impact on your capital and overall profit overtime.
The so-called zero free exchanges are often found to trade against their customers or have other ways of profiting, such as selling their users data to analytical companies, etc., which is not mentioned anywhere. Each and every exchange should be seen as a company trying to make a profit and the main way trading platforms are earning money is through trading and withdrawal fees.
To scale further, they must find the right balance between competitive fees for all pairs and continually improve their infrastructure. They shouldn’t sacrifice other important pillars of a stable trading platform such as security and adequate support because of the lucratively lower fees.
Bybit, Deribit, Bitmex, PrimeXBT and Margex have this balance to some extent, and each of the four is better than the other in different areas. It’s difficult to determine which is the best of the four because they have different tools. One offers 100x on all its crypto pairs + traditional markets, others have internal books with high liquidity, etc….
Traders with larger capital usually chose the platforms with the lowest fees combined with a history of successful growth and no breach records. Nevertheless, all of the four platforms offer a good environment for trading depending on your preferences. Knowing the fee of a platform can help you to calculate correctly your profits, for example, on PrimeXBT you can read here to understand more.
Traders with larger capital usually chose the platforms with the lowest fees, combined with a history of successful growth and no security breaches.
Competitive fees matter!
New exchanges and trading platforms are emerging almost every month. Competitive fees and innovative instruments are a must in order to remain in business.
At some point in the future, we may see a hybrid model – flat rate and a smaller percentage – that offer much more scope for more flexible trading platforms to capture a share in the market.
Trading platforms can always adjust their fees to stay competitive, and being in a volatile industry like crypto can be the difference between bankruptcy and success. If the fees that are too high, it will be difficult for it to attract new users. If it is too low, trading platforms may find it difficult to cover their costs.
Comparing fees on leverage trading platforms will help you to choose the right one for your strategy. Many new traders forget to do research on the exchanges and end up paying more for their activity.
When you execute a market buy or sell you are taker as you take out of the order book. When you want to realize profit and take it immediately you are paying the taker fee. With a market order, you are basically wiping out the order book liquidity.
When you place an order through a limit order, you are helping fill the order book. This way you are adding to the depth of the market and pay the maker fee.
The market maker fee is lower than the taker fee. It’s the same on all of the 4 platforms, however, you have a clear winner here – PrimeXBT.
This slight difference in the long term may become a significant one, especially if you trade consistently and with a larger capital. Don’t get excited right away and jump to the winner in this category.
A Funding fee is a fee that the exchanges take for providing you with borrowed funds. Usually, this is where we will see the major difference between the platforms.
20.6$ for long per 1 BTC
10.3$ for short per 1 BTC
PrimeXBT is taking a different approach as it sets a flat rate on the funding fee model.
Having a flat rate will be good if the value of BTC is high. Deribit has the highest funding rate here, more than double compared to Bybit and Bitmex which have almost the same funding rate.
The loser here is clearly Deribit with 0.025%. Bybit and Bitmex are very close to leverage design overall, so you can say that they are close competitors, with Bybit taking it up a bit. Even a difference so small can make a big impact on the long term strategies while saving you quite a lot. Therefore choosing the lower fee exchange may be the better choice.
Which one should I choose?
Each platform exceeds in different areas, therefore choosing one, if you want to trade seriously, should be made after appropriate research.
First of all, you need to know what kind of trader you are and what kind of strategy you have. Different strategies are suitable for different exchanges.
For example, PrimeXBT is best suited for day trading, accounting for its fast order execution and flat financing fee.
When playing with a lot of money, it’s nice to know that you will be paying the same financing regardless of the price of BTC.
For longer timeframe positions, it would be better to use Bybit or Bitmex as their take on leverage is better suited.
For best security practices, Deribit would be the most convenient choice as there have been no breaches since its inception. The exchange itself is with very high security in place.
What else should I look for?
Out of the four platforms in this comparison, PrimeXBT is the most densely packed since it has Crypto/Commodities/Stock Indices and Forex as an option for high leverage trading. It also offers the highest leverage for most of the assets compared to the other platforms.
Deribit is least competitive in that term, with only two options, BTC and ETH. Besides perpetual contracts, however, it also offers futures and options.
Playing with leverage can be exciting and very profitable, however, it also carries a risk of liquidation of funds. Making the right decisions from the start is difficult. It would, therefore, be best to try out the platforms for yourself.