3 Things Every Crypto Investor Should Know About Trading Bitcoin Futures

Published on by Cointele | Published on

Trading Bitcoin 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.

There are quite a few hidden costs when trading Bitcoin futures contracts.

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.

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.

Assuming Bitcoin is at the $10,000 level, the $100 initial deposit of 0.01 BTC now requires a 4.7% gain to break even after the $3,000 trade considering taker fees.

Most futures exchanges offer a negative maker fee, which seems like a pretty good deal as traders are then getting paid to trade.

If there are enough buyers at a certain level, market makers will likely scalp it by placing orders a few cents ahead. Even though a single order might not trigger such activity, algorithmic trading strategies monitor herd-like activity.

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