How to avoid unnecessary exchange fees? Practical advice
Hi everyone, I'm Mike, and today I want to talk to you about how to avoid unnecessary handling fees in cryptocurrency trading. I believe that for many of our Taiwanese friends, exchange fees can sometimes be a nuisance, especially when you trade frequently, and those seemingly small fees can add up to a significant amount of expenses. Therefore, learning how to effectively minimize handling fees is a key to improving trading efficiency and profitability. In the following, I will share some simple but practical tips to help you reduce unnecessary fees in the process of cryptocurrency trading.
Choose a low-fee exchange
The most straightforward approach is to choose an exchange with a reasonable fee structure. In Taiwan, exchanges such as OKX and Binance offer relatively low fees, and sometimes offer additional discounts based on a user's trading volume or coin holdings. For example, OKX offers a "rebate program" for long-term users that can significantly reduce trading fees. In addition to this, it is also important to understand the exchange's fee structure, as some exchanges charge different rates for different pairs of trades, so it is important to be aware of this.
Take advantage of rebate programs and promotions
Rebate programs are a very effective way to lower your commission. Many exchanges, such as Euronext and Binance, offer rebate programs that reduce fees based on the volume of trades you make or the number of users you refer. For example, if you complete a certain amount of trades on the Euronext exchange, you will receive a discount on the platform's rebate, which can significantly reduce the cost of each trade. In addition, many exchanges regularly offer fee waivers, such as "Exchange Holiday Specials" and "Fee Waivers for Specific Currencies", which are usually very helpful for frequent traders.
Choosing the right pair
Some pairs have higher fees because exchanges set different rates based on the liquidity of the pair and market demand. Generally speaking, mainstream pairs with higher liquidity (e.g. BTC/USDT, ETH/USDT, etc.) will have lower fees, while cooler pairs will have higher fees. Therefore, choosing to trade on more liquid pairs will help you avoid high fees. If you trade frequently, check and choose pairs with lower fees and better liquidity.
Payment of handling fees with platform tokens
Platform tokens (e.g. Binance's BNB, Ouyi's OKB) are often discounted, and many exchanges support the use of their own platform tokens to pay for trading fees. Not only do you get additional fee reductions, but you also get to accumulate platform tokens, which could lead to even more benefits in the future. For example, Binance's BNB token holders can enjoy a discount on fees, which is especially important for high-frequency traders. Using platform tokens to pay for trading fees is a smart way to reduce trading costs.
Choosing the right trading method: Market orders vs Limit orders
Exchange handling fees tend to vary depending on the type of transaction. Market orders, which are orders that are filled immediately, usually carry a higher fee, while limit orders, which are orders that you set at a specific price and wait for the market price to reach that point before they are filled, generally carry a lower fee. If you can put up with it for a while and are able to predict the market, choosing a limit order not only saves you some of the handling fees, but also has the potential to realize a better trade price when the price is reached, so you can do both.
Avoid frequent small transactions
Many new investors are accustomed to making frequent small trades, which often leads to the accumulation of handling fees. Although the cost of each trade may seem small, these costs can add up quickly once you trade more frequently. To avoid this, try scaling up the size of your trades to a larger amount per trade, which will result in a relatively low percentage of fees per trade, and thus reduce your overall fees.
Understand the platform's transfer fees before transferring funds.
In addition to trading fees, fund transfer fees are also an area to be aware of. Some platforms charge extra fees for depositing or withdrawing funds, especially for cross platform or cross currency transfers. These fees may not seem like much, but if they are frequent, they can become a significant expense in the long run. Before transferring funds to an exchange, it is recommended to understand the platform's deposit policy and choose a free or low-cost transfer method, which can effectively reduce unnecessary fees.
Use of stable currency as a medium of exchange
Using stablecoins (e.g. USDT, USDC, etc.) as a medium of exchange often reduces exchange fees. Many exchanges charge relatively low fees for trading pairs with stable coins, especially in volatile markets, and trading with stable coins can help you avoid unnecessary fees. Stabilized coins are more liquid in the market, making them easier to trade and ensuring that your trading costs are more stable and not affected by price fluctuations.
Frequently Asked Questions Q&A
Q1: How do I choose the exchange with the lowest commission?
A1: The first step in choosing the exchange with the lowest fees is to understand the fee structure of each exchange. You can choose exchanges that charge low fees for commonly used currency pairs and pay attention to whether there are rebate programs or other promotions. Common low-fee platforms include Euronext and Binance.
Q2: What is Rebate Program?
A2: A rebate program is a program whereby an exchange offers a discount on the commission or a rebate of a portion of the fee based on the volume of trades made or the number of referrals made by the user. This is a very practical way for high-frequency traders to reduce their commission expenses.
Q3: Is there a big difference in the handling fee between stable money and other currencies?
A3: Yes, stable currencies (such as USDT) usually have lower fees because of their high market liquidity and the exchanges set relatively low fees for such transactions. If you want to lower your fees, it is a good idea to trade with a stable currency.
I hope these practical suggestions will help you to save unnecessary fees and increase the effectiveness of your trading in cryptocurrency trading. If you have any other questions, please feel free to leave a comment!
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