Did you know that even a small trading fee of 0.1% can silently drain your profit, especially if you are trading multiple times daily?
While many traders keep a keen eye on the price chart and market trends, they miss the “exchange fee” concept. This fee can have a huge impact over time on their trades, as it can maximize their profits.
Exchanges use the maker-taker fee model to maintain liquidity in the market. So, those who add new orders to the book are rewarded with lower fees, while those who quickly execute their orders pay more.
Maker and Taker Fees Explained in Crypto Trading?
While trading cryptocurrency, you will either come across maker or taker fees that directly affect how much you pay each time you trade. It’s important to understand the difference between the two to better manage your trading costs.
Maker Fee
A maker adds liquidity to the exchange by placing an order that doesn’t immediately get filled. In this case, the order sits waiting until someone takes it. Depending on the exchange, the makers may be rewarded with lower fees or receive a rebate amount for adding liquidity to the market.
Example
Suppose you want to sell Ethereum for $3,500, but the current market price is $3,350. Since you placed the limit order for selling and the market rate is low, no one would be willing to purchase your Ethereum, which would sit in the order book, adding liquidity to the market. In this case, you will be the maker, and once your share is sold, you will pay maker fees or receive a small rebate.
Taker Fee
A taker eliminates liquidity from the exchange by placing an order that immediately gets filled. This happens when the limit order’s value matches the market rate and the share is sold at the best available price. By doing this, the trader removes liquidity from the exchange and usually pays a higher fee.
Example
Say you are buying Ethereum for $3,000 and someone else is selling at the same price. Your order request immediately gets filled, and since you are the taker, you must pay a portion of the taker fee set by the exchange.
Maker vs Taker: The Differences?
The role of Maker and Taker is completely different in crypto trading. While a maker adds liquidity to the market, a taker removes it by placing orders at current market prices. The table below shows a detailed comparison between the two.
| Feature | Maker | Taker |
| Role | Adds liquidity to the exchange by placing orders that sit in the order book | Removes liquidity from the order book by placing orders that immediately gets filled |
| Order Type | A limit order is placed by specifying the exact buying or selling price | Market order placed, which immediately gets filled by the available market price |
| Execution Time | May take longer — depends on market movement | Instant execution at the available price |
| Fees | Most exchanges offer lower trading fees or rebates to makers | Takers are charged higher fees as they consume existing liquidity |
| Order Fill Certainty | There is no guarantee of orders being filled, as if the market moves away from the price, the order may remain open or even get cancelled | Orders are filled immediate at the best available market price |
| Slippage Risk | Minimal to none, as the trade only takes place if their desired market price comes | Higher risk, especially in volatile or illiquid markets |
| Market Impact | Helps tighten spreads and stabilize prices | Can shift prices slightly depending on order size |
| Trading Strategy Fit | Suited for patient or strategic entries | Suited for reactive or time-sensitive trades |
| Exchange Incentives | May receive fee discounts or rebates | Rarely rewarded; typically faces full fees |
Why Do Exchanges Charge These Fees Differently?
The difference in charged fees between the two roles depends on how their trade affect market liquidity while contributing to the functionality of the exchange.
As mentioned above, makers add liquidity to the market by placing order limits that are not filled immediately. This helps other traders to find matching orders without significant price slippage, and as exchanges want this, they reward the makers with lower fees.
In contrast to makers, takers remove liquidity from the market by placing orders that are filled immediately. This reduces the depth of the order book, making trades complete quickly. As the makers take away liquidity from the market, the exchanges charge them with higher fees to maintain the balance in the trading system.
This difference in the pricing model allows the traders to contribute to the market liquidity instead of consuming it with an orderly flow of trades.
The Impact of Maker vs Taker Fees on Your Trading Strategy
The maker vs. taker model can directly influence your trading costs and long-term returns; therefore, understanding this model helps you optimize your profits.
Active traders, such as scalpers or day traders, often place market orders for fast execution while paying a higher fee, listing them as takers. This quick execution drains their profit, especially when working with tight margins. Consider a simple example to understand this: if you are making hundreds of trades per week, then even a 0.1-0.2% fee difference per trade can lead to a big loss over time.
However, if you are a swing trader who prefers limit orders, you can benefit from reduced fees and have better price control. While you might not get your orders filled immediately or at all, you can still have strategic entry and exit points at a lower cost.
Furthermore, being a maker or taker can affect your slippage, especially in a volatile market. While the taker approach might execute at a worse price than expected, makers can set their own price and avoid risk.
Tips to Minimize Trading Fees
If you’re looking to avoid trading fees, then do understand that it’s nearly impossible to do so, but you can always minimize and preserve your profit, and the tips below show how to do this.
- Use limit orders to become a maker. This way, you can pay low fees and even receive a small rebate on some platforms.
- Increase trading volume, as many exchanges often use a tiered free model, which reduces your fee if you trade within 30 days.
- Some exchanges give a fee discount to native token holders. This fee discount depends on the platform’s policy.
- Exchanges often run promotional campaigns offering fee reductions, rebates, and even referral bonuses.
- Join the exchange VIP or pro programs, as some platforms offer membership perks like reduced fees, quick withdrawals, and much more.
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Frequently Asked Questions (FAQs)
Q: Is it better to be a maker or a taker in crypto?
While makers pay low fees and are ideal for strategic trading, takers can easily deal with volatile market conditions with faster execution. It depends on how much risk you are willing to take because both users have their perks and losses.
Q: Why are taker fees usually higher than maker fees?
As takers remove liquidity from the market, the number of open orders in the market reduces, further affecting the price and order depth. This is why exchanges charge takers with higher fees to maintain a balance between traders by adding liquidity in the market.
Q: Do all exchanges charge maker and taker fees?
Almost all exchanges charge maker and taker fees, but their structures vary.
Q: Can I reduce my maker or taker fees?
Yes, you can reduce the fees either by increasing trading volumes, becoming a VIP member of an exchange, holding and using native tokens, or simply by using limit orders.
Q: What is the difference between the maker and taker fees Binance?
Maker fees are typically lower than taker fees on Binance. At the base level, both the maker and taker fees are 0.10%, but you can reduce the fee if you’re using Binance’s native token.
Q: How can I avoid maker and taker fees?
While no way yet exists to avoid the maker and taker fees, you can still minimize them.
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