Trading Bitcoin (BTC) futures might seem easy on the surface but there are a number of fees that investors seeking big returns from high leverage trades ignore. In addition to trading fees, investors should also be aware of the variable funding rate that many exchanges levy and even maker and taker fees should be taken into account. Let’s take a look at three things every crypto trader should know about trading Bitcoin futures.
Know the funding rate
There are quite a few hidden costs when trading Bitcoin futures contracts. The most basic one is the funding rate charged to all perpetual futures. These instruments are also known as perpetual swaps and such fees are applied at every exchange. The funding rate might not be relevant for short-term leverage traders as it is charged every 8 hours and rarely exceeds 0.20%. For a longer-term investor, this represents almost 20% per month, a significant cut of any expected profits. This fee varies as demand for leverage shifts from long buyers, to short sellers. As shown on the chart above, positive figures indicate that buyers will be paying such a fee to sellers, and the opposite holds when the funding rate is negative.
Fees add up on leveraged amounts
Trigger happy traders usually overlook trading fees as 0.075% seems like a pretty low figure but it's important to note that those costs are charged upfront based on the leveraged amount traded. An investor depositing 0.01 BTC will be paying the same taker fees for a $3,000 trade as another trader depositing 1 BTC. That adds to 0.075%*3,000 = $2.25, reducing one’s margin and potential gains. Read More...