How Much Does It Really Cost to Trade Crypto Futures? A Full Fee Breakdown
Crypto futures, which often refer to perpetual futures contracts, have become popular among traders who want to profit from the ups and downs of cryptocurrency prices. But many beginners do not fully understand how much it costs to trade them. If you are planning to start trading crypto futures, it’s important to know all the trading fees, visible and hidden.
In this blog, we will explain what crypto futures are and break down all the important costs to help you make better decisions and avoid surprises while trading.
The 3 Core Costs of Trading Crypto Futures
1. Trading Fees (Maker vs. Taker Fees)
Every time you open or close a futures trade, the exchange charges a trading fee. This is a basic cost that applies to all traders.
There are two types of trading fees: maker fees and taker fees.
- A maker fee is charged when your trade adds liquidity to the exchange’s order book. Because you are adding liquidity, exchanges usually charge you a lower fee for this.
- A taker fee, on the other hand, is charged when your trade removes liquidity from the order book. In this case, you are “taking” liquidity by removing an existing order from the market.
Example:
If the taker fee is 0.05% and you place a trade worth ₹10,000, you will pay ₹5 as a trading fee. If you are a maker with a fee of 0.02%, the cost would be ₹2 for the same trade.
The exact fee depends on the exchange you use and your trading volume. For instance, Mudrex charges a trading fee of 0.03%-0.05% on crypto futures trades. These exact fee percentages vary based on your 30-day trading volume, which means the more you trade, the lower your trading fee.
2. The Funding Fee
The funding fee is a charge that applies to futures contracts. Unlike regular futures, perpetual futures do not have an expiry date. So, to keep their price close to the real market price of the cryptocurrency, exchanges use funding fees.
This fee is paid between traders, not to the exchange. It works like this:
- When the funding rate is positive, traders who have taken long positions (betting the price will go up) pay a small fee to traders who have short positions.
- When the funding rate is negative, traders who have short positions (betting the price will go down) pay the fee to long traders.
Example:
If the funding rate is +0.01% and you are holding a long position worth ₹1,00,000, you will pay ₹10 in funding fees during that funding interval (usually every 8 hours).
Funding rates change often depending on market conditions. You should always check the current rate before holding a position for a long time.
3. Liquidation Fees
Liquidation is the forced closing of a trader’s leveraged position by the exchange when their margin falls below the required level due to adverse price movements. If you are using leverage (borrowing money to trade a larger amount), your risk of liquidation is higher.
When you get liquidated, the exchange automatically closes your position to stop further loss. This is done to protect both the trader and the platform. When this happens, the exchange usually charges a liquidation fee.
The liquidation fee is often a percentage of the trade size, and it varies by platform.
Example:
If you open a trade worth ₹50,000 and it gets liquidated, you might be charged a liquidation fee of 1%, which is ₹500. Some exchanges may also charge extra fees to cover the cost of closing the trade.
To avoid liquidation, you should:
- Use lower leverage
- Set stop-loss orders
- Monitor your margin level regularly
What Are Crypto Futures?
Crypto futures are contracts that allow you to buy or sell a cryptocurrency at a future date, at a price agreed upon today. You do not actually own the cryptocurrency. Instead, you are betting on whether the price will go up or down.
Let’s say you think the price of Bitcoin will increase. You can enter a long position, which means you expect the price to rise. If you think the price will drop, you can enter a short position. If your prediction is right, you make a profit. If it’s wrong, you make a loss.
Crypto futures can be powerful tools to earn money quickly, but they also come with certain risks. One of the most important things to understand is the cost of trading them. There are three main types of fees you need to know about.
Conclusion
Crypto futures can offer high rewards, but they also come with several types of fees that traders must understand. Before you start trading, it’s important to know the three main costs:
- Trading fees, which apply whenever you place a trade
- Funding fees, which are ongoing payments between long and short traders
- Liquidation fees, which apply when your position is forcefully closed due to losses
By learning about these costs in advance, you can plan your trades better, reduce your risks, and avoid unexpected charges. Always read the fee structure of your trading platform carefully and stay updated with any changes.
Want a closer look at Mudrex’s trading fees? Find our detailed fee breakdown here! And, to start trading, download the Mudrex app now.
