How to calculate the CoinW contract fee

Understanding CoinW contract fees involves determining the contract type (perpetual or futures), contract value, maker/taker fee (or funding fee for futures), and applying the appropriate rate to calculate the total fee.

Nov 25, 2024 at 06:26 am

How to Calculate the CoinW Contract Fee

Understanding CoinW Contract Fees

CoinW, a renowned cryptocurrency exchange, offers a robust platform for trading perpetual and futures contracts. These contracts involve a fee structure that can impact your trading experience and profitability. Understanding how to calculate the CoinW contract fee is crucial for effective risk management and maximizing returns.

Steps to Calculate CoinW Contract Fee

1. Determine the Contract Type

CoinW offers two types of contracts: perpetual contracts and futures contracts. Perpetual contracts have no designated expiry date, while futures contracts expire at a specific time. The fee calculations differ between these contract types.

• Perpetual Contracts: Perpetual contracts incur a swap fee, which compensates the exchange for holding the contract open. This fee is adjusted regularly based on market conditions.
• Futures Contracts: Futures contracts have an expiry date, after which they expire worthless. A funding fee is charged on futures contracts to ensure that their prices remain aligned with the underlying asset's spot price.

2. Identify the Contract Value

The contract value refers to the notional value of the contract, which is the underlying asset's current market price multiplied by the contract size. For example, if the Bitcoin perpetual contract has a contract size of 0.01 BTC and the Bitcoin price is $40,000, the contract value is 400 USDT.

3. Calculate the Maker and Taker Fee

CoinW charges different fees for order makers and order takers. Maker fees apply when you place a limit order that adds liquidity to the order book, while taker fees apply when you place a market order that takes liquidity from the order book. The fee schedule varies based on the contract type and VIP level.

• Perpetual Contracts: Maker fees are usually lower than taker fees, as makers contribute to market liquidity. For example, the maker fee might be 0.02% while the taker fee is 0.04%.
• Futures Contracts: Futures contracts have a maker/taker fee structure similar to perpetual contracts, with makers typically paying lower fees.

4. Calculate the Funding Fee (For Futures Contracts Only)

The funding fee on futures contracts is adjusted every 8 hours to align the contract price with the underlying asset's spot price. The funding fee calculation considers the prevailing market sentiment and is designed to encourage or discourage long or short positions.

• Positive Funding Fee: If the futures contract price is higher than the spot price, indicating long positions are dominant, a positive funding fee is charged to long positions and paid to short positions.
• Negative Funding Fee: If the futures contract price is lower than the spot price, indicating short positions are dominant, a negative funding fee is charged to short positions and paid to long positions.

5. Calculate the Total Contract Fee

Once you have determined the maker/taker fee (for perpetual contracts) or the funding fee (for futures contracts), you can calculate the total contract fee by applying the appropriate rate to the contract value.

Example:

Let's say you enter into a perpetual contract with a contract value of 100 USDT and you are a maker. With a maker fee of 0.02%, your contract fee would be:

100 USDT x 0.02% = 0.02 USDT

Additional Considerations:

• CoinW provides VIP level discounts on trading fees. Higher VIP levels afford lower fees, making it advantageous to maintain a high trading volume.
• Contract fees can have a significant impact on your trading profitability, especially for leveraged positions.
• It's important to factor contract fees into your trading strategy and risk management calculations to avoid unexpected costs.