Many crypto exchanges offer lower fees for makers and higher fees for takers. For example, Kraken charges 0.10% less for makers. (In US equities, makers usually get paid!) Sound enticing, but let's walk through this.
Think about an exchange order book with a bunch of resting bids and asks. You go to enter a buy order and generally need to choose an order type. The most basic types are a market order and a limit order, where you also need to specify a limit price. Below is how it looks on Coinbase Pro.
There are 3 possible scenarios:
In the 3 scenarios outlined above:
There is a trade-off and the lower fee is not for free. If you are a taker, you immediately have your order filled and gain the exposure you want. If you are a maker, you have roughly a 50% chance of being executed. Let's walk through the possible scenarios. The market in Bitcoin is $9109.90 bid at $9110.10 ask. You decide to enter a limit order to bid $9109.90 and join the best price. One of the following will then happen:
With so many professionals and high frequency traders playing in the order book, you are most likely going to see scenario 1 or 2 and not trade at a favorable price. You might pay a lower exchange maker fee, but you are much more likely to end up paying too high a price or missing the trade and chasing the market. Leave this to the professionals and stick to market orders until you gain the confidence to consistently execute well as a maker or have powerful algorithms to automatically manage order placement.
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