What are the necessary expenses for contract trading? How can we reduce these expenses?
Frequent contract traders all know about transaction fee expenses. Because contract transaction fees accumulate over time, they can take up a large portion of capital, and losing them for no reason can be painful.
But there are also two other expense fees. Many users are not very aware of them. Some only know by hearsay but do not understand.
They are funding fees and liquidation fees. These three fees are all calculated based on the user's position value, so the formulas are the same.
Calculation formula:
Position value × Transaction fee (funding fee) (liquidation) rate = Transaction (funding) (liquidation) fee
Next, let's discuss under what circumstances different fees are calculated.
Transaction fee: When users open and close positions, calculations need to be made each time. The contract also varies in transaction fee rates based on whether users use limit or market orders. The transaction fee rate for ordinary users is 0.02% for limit orders and 0.15% for market orders.
Funding fee: This only appears in perpetual contracts, as there is a price difference between spot and contracts, so funding fees are used for adjustments.
If the price difference is large, it will lead to platform intervention and adjustment of calculation time.
Generally, the settlement time is mostly every eight hours, specifically at 0:00, 8:00, and 16:00.
Some altcoins settle every six hours.
Liquidation fee: This is calculated based on the user’s position value after liquidation. The liquidation fee is 1.5% of the position value. Note that the liquidation fee is calculated additionally.
How can we reduce these additional expenses?
Transaction fee: The simplest and most cost-effective way is to get a rebate by registering and filling in the rebate invitation code. Different invitation codes have different rebate ratios, times, and methods.
Holding BNB allows U-based contracts to enjoy a 10% discount on transaction fees, and it can also increase VIP levels to reduce transaction fee rates.
Use limit orders more to significantly reduce transaction fee expenses.
Funding fee: This depends on individual circumstances. Some users specifically look for cryptocurrencies with high funding rates to take advantage of the funding rate. However, there are still risks, and users need to operate cautiously.
Liquidation fee: Set stop losses around the liquidation point to prevent positions from being liquidated. After liquidation, only a liquidation fee is generated, and no transaction fee is incurred, so there is no rebate return.
