A guide to cryptocurrency trading fees

Most cryptocurrency platforms and exchanges charge trading fees, but how they're calculated (and how much they cost) can vary significantly.

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When you buy or sell a cryptocurrency through an exchange, platform or broker, it will normally charge you a fee for providing the service.

These trading fees are separate from any deposit or withdrawal fees you may need to pay when transferring your cryptocurrency or adding or withdrawing funds from your account.

You'll also need to pay trading fees when using decentralised exchanges and automated market makers (AMMs) like Uniswap. However, in this case, a percentage of your fees is directed to those providing liquidity on the trade you are making.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade.

How do cryptocurrency trading fees work?

Cryptocurrency trading fees are normally charged on every trade you make, and can be either percentage fees or flat fees.

A flat fee is a set amount that is charged on every trade, regardless of the size of the trade. For example, a platform with a flat $5 trading fee means you would be charged $5 on every trade, no matter how much you are buying or selling.

Flat fees may be beneficial for those making large trades, but would be more expensive for those looking to make lots of trades, or only looking to trade smaller amounts.

Percentage fees are when you a charged a certain percentage of the overall size of your trade. For example, if you bought $100 of Bitcoin from a platform with a 1% trading fee, you'd pay a trading fee of $1. If you bought $1,000 of Bitcoin, you'd instead be charged $10.

Most cryptocurrency platforms charge percentage-based fees, and these generally vary from around 0.05% to up to 4%. Percentage fees are beneficial for those who regularly trade, or are looking to make smaller trades, but could be more expensive for those making large trades, compared to flat fees.

What is spread?

The spread is the name given to the difference between the price you can sell an asset for (the "bid" price) and the price you can buy it for (the "ask" price). Many trading platforms use a set or variable spread to help protect them from market volatility, and also as a source of revenue in addition to any trading fees or commissions.

For example, a cryptocurrency exchange may offer to let you buy Bitcoin at a price of $50,000 per Bitcoin, but will only let you sell it back at a price of $49,000 per Bitcoin. This means if you were to buy 1 Bitcoin and immediately sell it back, you'd lose $1,000 (in addition to any trading fees), even if the price of Bitcoin didn't change during that time.

Like trading fees, spreads vary across different platforms and even across different cryptocurrencies. They generally range from 0.5% to 5%, but can change depending on both supply and demand and the volatility of the asset at a given time.

When comparing different cryptocurrency platforms, it's important to take into account the spread as well as regular trading fees, as both have a big impact on the cost of your trades.

When comparing cryptocurrency platforms, it's important to understand their fee structures (including spread). Not only can fees vary significantly across different exchanges, but the types of fees they charge can have a big impact on your investing strategy.

Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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