How to calculate Bithumb contract fees

Bithumb's contract fees comprise maker fees for liquidity providers, taker fees for market order execution, and margin funding fees for leveraging positions.

Nov 12, 2024 at 04:12 am

How to Calculate Bithumb Contract Fees

Introduction:

Bithumb, a leading South Korean cryptocurrency exchange, offers a comprehensive suite of contract trading services, allowing users to speculate on the future price of cryptocurrencies. To ensure a transparent and informed trading experience, Bithumb charges a range of fees for contract trading. Understanding these fees is crucial for traders to optimize their profitability and avoid unnecessary expenses. This article provides a detailed guide on how to calculate Bithumb contract fees, covering all aspects of the fee structure.

Calculating Bithumb Contract Fees

1. Understanding the Fee Structure:

• Bithumb charges three main types of contract fees:

  • Maker Fee: Charged when a trade is executed against an existing order on the order book.
  • Taker Fee: Charged when a trade is executed immediately against the best available bid or ask price.
  • Margin Funding Fee: Charged when traders borrow funds to increase their leverage in margin trading.

2. Maker and Taker Fees:

• Maker fees are typically lower than taker fees, rewarding traders who provide liquidity to the market by placing limit orders.
• Taker fees, on the other hand, are charged to those who take liquidity from the market by executing market orders.
• Bithumb's maker and taker fees vary for different contract markets and are typically expressed as a percentage of the contract value. Traders can view the fee rates for each contract by selecting the "Fees" tab within the trading interface.

3. Margin Funding Fees:

• Margin funding fees are charged on a daily basis when traders borrow funds from Bithumb to leverage their positions.
• The fee rate is determined by the interest rate prevailing in the market and is usually expressed as an annual percentage rate (APR).
• The margin funding fee is calculated as: (Margin Funding Loan Amount x Margin Funding Fee Rate) / 365.

4. Additional Fees:

• In addition to the three main fee types, Bithumb may also charge additional fees for certain actions:

  • Position Close Fee: Charged when a trader closes an open position, sometimes used to incentivize holding positions for long periods.
  • Unrealized PNL Funding Fee: Charged on unrealized profit/loss in perpetual contracts to minimize the risk of market manipulation.
  • Withdrawal Fee: Charged when traders withdraw funds from their Bithumb account, varying according to the withdrawal method and cryptocurrency.

5. Fee Calculation Example:

• Let's assume you want to trade a BTC/USDT futures contract on Bithumb.
• For this contract, the maker fee is 0.01%, the taker fee is 0.02%, and the margin funding fee is 0.01% per day.

• If you execute a maker order for a BTC/USDT futures contract with a value of $50,000:

  (Maker Fee) = $50,000 x 0.0001 = $5

• If you execute a taker order for the same contract:

  (Taker Fee) = $50,000 x 0.0002 = $10

• If you borrow $10,000 for margin trading with a margin funding fee rate of 0.01% per day, assuming it remains unchanged for 30 days:

  (Margin Funding Fee) = ($10,000 x 0.0001) / 365 x 30 = $0.82

Additional Considerations:

• Fees are Negotiable:

  Bithumb may offer reduced or negotiated fees to high-volume traders or those with substantial assets on the platform.

• Check Fee Structure Regularly:

  Bithumb may adjust its fee structure from time to time. Traders should monitor updates and ensure they stay informed of the latest fee rates.

• Consider Total Trading Costs:

  When evaluating the profitability of a contract trade, traders should not only consider the contract fees but also other expenses, such as withdrawal fees and slippage.

• Other Factors Influencing Fees:

  Market conditions, liquidity, and trading volume can also impact the fees charged by Bithumb.