When It Comes To Charges, Transparency Is A Top Priority For Us
Understanding exactly what you’re paying for is an important matter for every trader. In this respect, Monfex strives to be as much transparent as possible.
In this article we’d like to discuss in details all types of charges you will be incurring while trading cryptos with Monfex.
Types Of Charges
There are three primary types of charges that you will be paying while trading cryptocurrencies: Spread, Financing rate, and Commission.
It is important to note that only commissions are charged directly by Monfex.
The spread is defined by the market itself and is a floating cost. The higher the market liquidity, the lower the spread.
The financing rate (the SWAP) is also defined by the market and is floating.
Below we discuss each of these types of charges in more details.
Spread is the difference between the ask and bid prices for a trading instrument.
The prices at which market participants are willing to buy are called bid prices and those at which they are willing to sell are called ask (or offer) prices. The highest bid in the market is the best bid, and the lowest ask in the market is the best offer. The ask prices are invariably higher than the bid prices.
When you are placing a buy market order you take the best ask price. Similarly, when you are placing a sell market order you take the best bid price.
The difference between the best bid and the best offer is the market bid-ask spread.
Spread is often used as an indicator of liquidity. Monfex provides ultra-low spreads, which means that our clients can enjoy trading in a very liquid crypto market.
Financing Rate (SWAP)
A financing rate is a fee charged for using leverage. It is also called a SWAP rate or a rollover rate. The financing rate is only charged when you’re holding a market position open overnight.
Leveraged crypto contracts are quoted in currency pairs like BTC/USD and ETH/USD. When opening a long position in a leveraged crypto contract you are essentially using the quote currency to buy the base currency.
For example, when trading BTC/USD long, you are using USD to buy BTC. Since there is leverage involved, you are technically borrowing the quote currency to buy the base currency.
As a result, you are incurring borrowing costs at an interest rate required to borrow the quote currency. Simultaneously, you are receiving interest income on the purchased base currency. The interest rate differential between these two currencies constitutes the financing rate (the SWAP rate).
At Monfex, the financing rate is charged/paid once a day at 5pm NYC time. If you do not have an open position at this time, you will not pay/receive the financing rate. The rate is dynamic and can change at all times depending on the financing rates quoted by Monfex's liquidity providers.
You can find the applicable financing rates on the instruments page and in the trading platform.
Also, if you’d like to learn more about leverage, you can find a lot of useful information in our article Leverage in Cryptocurrency Trading.
A commission is a flat fee charged whenever you perform a trade transaction. It is stated as a percentage and applies to the notional value of a trade.
Commissions are used in the best interests of clients. The value of commissions charged is commensurate with the value of the brokerage services provided.
Commissions are primarily directed to pay for the broker’s operating expenses. Such expenses are necessary to maintain the highest quality of our services and continuously improve our trading platform.
While trading with Monfex, you will be paying a commission of 7.5 bps (0.075%) per trade. For example, if you buy 1 Bitcoin at a price of $3,000, you will pay $2.25 ($3,000 * 0.075%) in commissions.
Compared to competitors in crypto trading industry, Monfex offers the lowest commissions for trades and provides best execution.