Why Is The Maker Fee Lower Than The Taker Fee At Most Exchanges?
Understanding what maker and taker fees are, along with other relevant trading fees, is important for anyone who trades cryptocurrencies. This is because different types of trading fees lead to different costs, which are related to different trading strategies. This article explains the concept of makers and takers, and how to leverage each one when trading.
A maker is the party that makes a quotation, while a taker is the one that takes it. Cryptocurrency traders have to pay trading fees for trading on an exchange, which are classified into two categories: “maker fee” and “taker fee.”
Normally, a maker places an order in the market, limiting its price and quantity, and then waits for other users to deal with it. If there is no matching order in the market, the maker’s order will remain on the exchange’s order book, providing a quotation for the entire market (This is the so-called “make the market” which defines the ‘maker’ term).
Based on the orders listed on the order book, a taker places an order with a certain quantity and price which trades immediately with existing orders. To make it simple, makers quote first, helping to make the market. If the price matches, takers trade immediately with makers’ quotations.
🔹2 .Why is the maker fee lower than the taker fee?
From the practice mentioned above, it is not hard to see that makers “create or make a market” for other traders and bring liquidity to an exchange, while takers remove liquidity by “taking” available orders immediately.
As exchanges need to attract traders and various orders to their platform to increase liquidity, exchanges may set a maker fee lower than a taker fee to expand the order book.
🔹3. How to enjoy the maker fee at Huobi Global?
If one wants to be a maker, the trader can offer a quotation that is lower than the market price when buying a token on the market.
Take spot trading of Bitcoin at Huobi Global as an example: Assume the market price is US$22,823 for one Bitcoin, if a buyer wants to be a maker, he/she can create a limit order with the price lower than the market price (US$22,750 for example).
The order will then be listed on the “sell order” side of the order book, and the buyer can wait for the market price to move to US$22,750. On the other hand, if a buyer wants to be a taker, he/she can just pick up an order from the order book or place an order at the market price.
A question may arise that since the maker fee is more favorable, why should investors choose to be a taker? It should be noted that as markers’ orders are always not immediately filled in a highly volatile market, this may result in a delay for the order to be filled. In such circumstances, traders can choose to be a taker to fill orders immediately to avoid losses caused by the delay.
🔹4. Huobi Global’s convenient function: Taker & Follow a Maker
To provide more convenience to users, Huobi Global offers the “Taker & Follow a Maker” function. Registered users can:
1: Visit Huobi Global: here
2: Click Spot Trading on the navigation bar;
3: Click “Taker & Follow a Maker” icon to begin setting;
After the “Follow a Maker” function is enabled, users can place limit orders (buy or sell) by using the price that they selected from the order book, and the quantity they set (available assets proportion, order book, or fixed quantity) in advance.
With this function, users can choose the “Post Only” mechanism to ensure that the limit order will be added to the order book and will not be filled with an existing order. If the order is immediately matched with an existing order, the order will be cancelled to ensure that the trader is always a maker. If no effective mechanism is selected, the system defaults to an ordinary limit order.
The “Taker” function enables users to place limit orders (buy or sell) by using the price they selected from the order book, and the quantity set (available assets proportion, order book, or fixed quantity) in advance.
With this function, users can select “IOC” or “FOK” to ensure that the order will be instantly filled, or cancelled immediately if the order cannot be entirely filled. If no effective mechanism is selected, the system defaults to a limit order.
Huobi Global recently released the new Prime fee rate scheme, enabling Prime members to enjoy discounted transaction fees as low as 0.0126% for spot trading, and rebates of up to 0.01% for derivatives trading.
🔹For more information, please click here.