Trading bitcoin with a positive edge: Taker Rebates on CoinFLEX
Bitcoin has been trading fairly close to its all time highs. However there has been plenty of volatility lately along with skepticism about whether it can push away from the range between $10,000 and $13,000. Moreover, other cryptocurrencies have been struggling in comparison. For these reasons, whether you are a bull or a bear, there has probably never been a better time to actively trade bitcoin on short time scales.
One popular way to do that has been to trade Bitmex’s perpetual swap or futures. Other similar products are available on Deribit and Kraken. All those platforms give traders of their perpetual swaps a 2.5 bips (0.025%) rebate if they post limit orders onto their orderbooks and charge them a 7.5 bips (0.075%) taker fee if they trade directly against orders already present. “Making” a price is posting a resting order to buy or sell in the orderbook on an exchange. “Taking” prices means that your order immediately gets matched by a resting order. All market orders, for example, are “takers”.
Attempting to scalp such swaps is extremely difficult for one simple reason. Traders either have to post limit orders for a rebate and risk missing the quick moves that bitcoin has been experiencing or take from the order book and pay 7.5 bips to do so. Suppose the best offer on Bitmex is currently exactly $10000. Anyone posting a limit buy order for $9999.50 may well miss a quick move up. Suppose a trader buys 10,000 contracts by taking the offer price instead. As they are paying 7.5 bips to enter the trade and, in this example, paying 7.5 bips to also exit the trade as a taker, they will have to pay a total of $15 dollars in fees. In other words, the price will have to rise to $10015 for the trader to breakeven. This is an enormous headwind for any short term trader. Contrary to the promises of many social media trading gurus, it is unlikely that anyone day trading bitcoin will make money with those kinds of costs.
CoinFLEX offers an extremely attractive alternative. On our exchange, traders who wish to take prices receive a rebate to do so. You are ahead of the game from the get go. Any trade against already present limit orders in the orderbook will receive a FLEX Coin credit at the end of each day (noon to noon GMT). At present FLEX Coin is trading at around 17 cents. The amount of credit a trader receives will depend on the proportion of taker volume they have traded each day. Traders new to CoinFLEX can learn about why CoinFLEX was founded, how to set up a new account with us, and get an overview of FLEX Coin.
As an illustrative example, suppose Natalie — a new trader on CoinFLEX — trades in clips of about 1 bitcoin futures using CoinFLEX’s mobile app and makes 25 round-trips in a day.
She is bullish and so buys, then sells to exit, 25 times. Over the course of the day, Natalie will have “taken” 50 bitcoin in volume. CoinFLEX’s July futures is presently doing about 5000 bitcoin in daily volume so Natalie’s trades may represent 1% of the day’s volume. The following table illustrates the effects on Natalie’s P/L from trading on CoinFLEX as a “taker” of bitcoin.
Natalie would have paid 3 bips in fees for each of her trades. However, she may elect to pay 100 FLEX Coin (or, about 17 dollars at current FLEX Coin prices) to halve her fees for the day. This means that her total fees for the day would be just 75 dollars if bitcoin is trading around $10,000. The net effect is that she has gained about $12 from each trade. Put another way, each trade in which she buys 1 bitcoin futures at $10,000 is in effect a trade starting at a price of $9,994. If she even manages to sell that 1 bitcoin futures at $10,000 again, it is as if she sold that 1 bitcoin at $10,006.
The FLEX Coin taker rebate makes CoinFLEX’s bitcoin futures the best way to trade bitcoin anywhere in the world as it’s the first Exchange that takes care to focus on takers by effectively giving you a rebate when you trade. Open an account, learn more about FLEX Coin and download our mobile app or use our industry leading exchange platform to get started.