Trading crypto feels simple on the surface. You open an app, tap buy or sell, and watch numbers move. But beneath that clean interface, every exchange follows a fee structure that can eat into profits more than a bad trade ever could.
That is why understanding maker and taker fees in crypto matters so much, especially if you trade often or plan to grow your portfolio steadily. In this article, we will explain what maker and taker fees mean, why exchanges charge them, and how they affect trading fees. Stick with me till the end.
KEY TAKEAWAYS:
- A maker is a trader who adds liquidity to the market by placing limit orders that don’t execute immediately.
- A taker is a trader who removes liquidity from the market by executing trades immediately against existing orders in the order book.
- The order book shows all buy and sell orders waiting on the exchange.
- Summarily, makers usually pay lower fees, while takers usually pay higher.
What Are Exchange Fees and Why Do They Exist?
Every crypto exchange runs a marketplace where buyers and sellers meet to trade assets like Bitcoin, Ethereum, or stablecoins. The exchange provides the technology, security, order matching, customer support, and compliance systems that make trading possible. To stay in business, the exchange charges fees.
These fees usually appear as trading fees, withdrawal fees, and sometimes deposit fees. But when people talk about exchange fees, they often mean the percentage the exchange takes from each trade. That percentage depends on how you place your trade, which is where maker and taker fees come in.
Understanding the Order Book in Simple Terms
The order book shows all buy and sell orders waiting on the exchange. Here, buy orders sit on one side and sell orders sit on the other. Also, each order lists a price and an amount.
When you place an order, two things can happen.
- Your order can match immediately with an existing order.
- Your order can wait in the order book until someone else matches it.
This difference decides whether you act as a maker or a taker.
Who Is a Maker?
You act as a maker when you add liquidity, which is the available orders that others can trade against, to the market. When you place a limit order that does not execute immediately, your order sits in the order book. Other traders see it and may trade against it later, making you a maker. Exchanges like this liquidity because it creates smoother trading and tighter spreads. As a result, they reward makers with lower fees.
Who Is a Taker?
You act as a taker when you remove liquidity from the market. This happens when you place a market order or a limit order that fills immediately, and you take an existing order from the order book. For example, if you place a market buy for Bitcoin at the current price. Your order matches instantly with someone selling, and you become a taker. Exchanges charge higher fees for this because instant execution costs them more in system load and liquidity management.
Maker vs Taker Fees
Summarily, makers usually pay lower fees, while takers usually pay higher. In fact, some exchanges give makers zero fees or rebates in rare cases. This fee difference encourages traders to place limit orders instead of rushing with market orders, which creates a healthier market.
Indeed, lower fees always sound better, but speed sometimes matters. As such, it makes sense to act as a taker when:
- The market moves fast, and you need instant execution.
- You want to enter or exit a trade immediately.
- You trade news or sudden price movements.
Read Also – Market Orders vs Limit Orders: What Crypto Traders Need to Know
How to Reduce Trading Fees Without Changing Your Strategy
Here are practical steps you can take to generally reduce costs when trading:
- Use limit orders more often (if speed does not matter) because they usually make you a maker.
- Avoid overtrading since more trades mean more costs.
- Learn the fee structure of your exchange.
- Plan your trade ahead properly instead of trading emotionally.
Conclusion
Maker and taker fees may seem like small details, but they directly impact how much you make with every trade. The good news is that once you understand how these fees work, you gain control over them. Moreover, you can use that knowledge to your advantage.
Goodluck!
FAQs
- What is a maker in crypto trading?
A maker is a trader who adds liquidity to the market by placing limit orders that don’t execute immediately.
- What is a taker in crypto trading?
A taker is a trader who removes liquidity from the market by executing trades immediately against existing orders in the order book.
- What is the order book, and how does it relate to maker and taker fees?
The order book is a real-time list showing all buy and sell orders waiting on the exchange, with buy orders on one side and sell orders on the other.
- Can maker fees be zero or negative on crypto exchanges?
Yes, some crypto exchanges offer zero maker fees or even negative maker fees (or rebates) for high-volume traders or specific trading pairs.
- Why do exchanges charge higher fees for takers than makers?
Exchanges charge higher taker fees because instant execution costs them more in system load, infrastructure, and liquidity management.
References
- komodoplatform.com – Market Maker vs. Market Taker: Everything You Need to Know
- cointracker.io – Maker vs. taker fees: Key differences, examples, and strategies
- bankrate.com – Maker and taker fees in crypto: What they are and who pays them
