How to calculate Poloniex contract fees

Traders must calculate Poloniex contract fees by factoring in maker/taker fees, funding fees, and trading volume discounts, which vary based on the contract type and market conditions.

Nov 25, 2024 at 01:11 pm

How to Calculate Poloniex Contract Fees

Understanding Poloniex Contract Fees

Poloniex offers perpetual contracts with varying fee structures based on the contract type, leverage, market condition, and trading volume. Traders must carefully consider these fees to optimize their trading strategies.

Types of Poloniex Contract Fees

Four main types of fees are associated with Poloniex contracts:

• Maker Fees: Charged when an order creates liquidity by adding to the order book.
• Taker Fees: Charged when an order removes liquidity by matching with an existing order in the order book.
• Funding Fees: Recurring charges or payments to maintain the balance between long and short positions.
• Withdrawal Fees: Fees incurred when withdrawing funds from the Poloniex account.

Calculating Poloniex Contract Fees

The fee structure varies depending on the specific contract. To calculate the applicable fees, follow these steps:

1. Determine Contract Type

Identify the type of contract being traded, such as USDT-M USD (USDT perpetual futures margined in USD) or BTC-M USD (BTC perpetual futures margined in USD).

2. Check Fee Schedule

Visit the Poloniex website and locate the fee schedule for the relevant contract. The schedule will provide the fee rates for both maker and taker orders across different tiers based on trading volume.

3. Calculate Fee Based on Tier

The number of contracts traded within a specific time period determines the applicable trading tier. Use this information to find the corresponding maker and taker fee rates.

4. Determine Funding Rate

For perpetual futures contracts, funding rates are determined based on the market conditions and the difference between the contract price and the index price. If the contract price is higher than the index price, long positions pay funding to short positions, and vice versa. To calculate the funding rate, follow these steps:

a. Get the Mark Price: It represents the fair value of the contract and is usually close to the index price.
b. Get the Index Price: It represents the price of the underlying asset for which the contract is based on.
c. Check the Funding Rate Schedule: This schedule provides the funding rate for different intervals (e.g., every 8 hours).
d. Calculate the Funding Fee: Use this formula: Funding Fee = Funding Rate Mark Price Notional Value * Funding Interval.

5. Factor in Taker Fees

If the order removes liquidity from the order book, a taker fee is applicable. Add this fee to the maker fee to determine the total trading cost.

6. Calculate Overall Fees

The overall fees for a trade consist of the maker fee, taker fee (if applicable), and funding fee (for perpetual futures).

7. Consider Discount Rates

Poloniex offers volume discounts for traders with higher trading volume. The fee schedules provide tiered fee rates based on the trading volume level. Traders with higher trading volume benefit from lower fees.

Example Calculation

For a BTC-M USD contract (10x leverage) with 10 contracts traded in the last 24 hours, the fee schedule indicates the following:

• Maker Fee: Tier 1 (0.02% or 0.0002)
• Taker Fee: Tier 2 (0.03% or 0.0003)

In this case, the calculation would be:

• Maker Fee (for adding 10 contracts): 10 * 0.0002 = 0.002 BTC
• Taker Fee (if removing liquidity): 10 * 0.0003 = 0.003 BTC
• Overall Fees (without funding fee): 0.005 BTC

Conclusion

By carefully considering the fee structure and following the outlined steps, traders can accurately calculate the trading fees associated with Poloniex contracts. This information empowers traders to optimize their trading strategies and manage their trading costs effectively.