Post-Only Orders: Minimizing Fees on Different Platforms.
Post-Only Orders: Minimizing Fees on Different Platforms
As a beginner in the world of cryptocurrency trading, understanding trading fees is crucial for maximizing your profits. While many focus on the price of the asset itself, the fees charged by exchanges can significantly erode your returns, especially with frequent trading. One powerful technique to minimize these fees is utilizing “post-only” orders. This article will break down what post-only orders are, why they matter, and how they function on popular platforms like Binance and Bybit, geared towards those just starting their crypto journey. We will also touch on how these concepts relate to more advanced trading strategies.
What are Post-Only Orders?
Traditionally, when you place an order on a crypto exchange, it can be executed in two ways: as a “maker” or a “taker.”
- Makers add liquidity to the order book by placing orders that aren’t immediately filled. These orders sit on the order book, waiting for a matching order.
- Takers remove liquidity by immediately filling existing orders on the order book.
Exchanges typically charge different fees for makers and takers. Maker fees are usually lower than taker fees, incentivizing users to provide liquidity.
A “post-only” order is a type of order that *guarantees* you will be a maker. The exchange will only execute your order if it doesn’t immediately match an existing order on the order book. If it would result in you being a taker, the order will simply not be executed. While this means your order might not fill immediately, it can lead to significant fee savings over time, especially for high-frequency traders.
Why Use Post-Only Orders?
The primary benefit of post-only orders is reduced trading fees. Here's a breakdown of why this is important:
- Fee Reduction: As mentioned, maker fees are typically lower than taker fees. Over time, the accumulated savings from consistently making orders can be substantial.
- Improved Profitability: Lower fees directly translate to higher profitability, particularly for strategies involving frequent trades.
- Discipline: Post-only orders can encourage a more disciplined trading approach. You're less likely to chase quick fills and more likely to consider the price you're willing to pay or sell for.
- Avoidance of Slippage: While not the primary function, sometimes avoiding immediate execution can help you bypass temporary price fluctuations (slippage).
Post-Only Orders on Popular Platforms
Let's examine how post-only orders are implemented on two prominent exchanges: Binance and Bybit.
Binance
Binance offers a robust set of order types and fee structures. Here’s how post-only orders work on the platform:
- Order Type: Binance offers a "Post Only" order type within its advanced order settings. You can find this option when creating a Limit order.
- Implementation: When you select "Post Only," Binance will only execute your order as a maker. If your order would be filled as a taker, it will be cancelled.
- Fee Structure: Binance’s fee structure is tiered based on your 30-day trading volume and BNB holdings. Maker fees are typically 0.10% (can be lower with BNB discounts), while taker fees are 0.10% (also subject to BNB discounts). The exact fees can be found on the Binance Fees page.
- User Interface: The Binance interface can be a bit overwhelming for beginners. When placing an order, you need to switch to "Advanced" mode to access the "Post Only" option. It’s located within the order type selection section.
- Considerations: Be aware that if market conditions change rapidly, your post-only order may not be filled at your desired price. Patience is key.
Bybit
Bybit is another popular exchange known for its derivatives trading, but its spot market also supports post-only orders.
- Order Type: Bybit also provides a dedicated "Post Only" order type.
- Implementation: Similar to Binance, Bybit will only execute your order if it doesn’t immediately match an existing order.
- Fee Structure: Bybit’s fee structure is also tiered, based on your 30-day trading volume. Maker fees can be as low as -0.025% (meaning you *receive* a rebate), while taker fees are 0.20%. This makes utilizing post-only orders particularly attractive on Bybit. Refer to the Bybit Fees page for detailed information.
- User Interface: Bybit’s interface is generally considered more user-friendly than Binance’s, especially for beginners. The “Post Only” option is readily available when creating a limit order.
- Considerations: Bybit's active promotion of maker rebates encourages the use of post-only orders, making it a favorable platform for this strategy.
Comparing Binance and Bybit for Post-Only Orders
| Feature | Binance | Bybit |
|---|---|---|
| Post-Only Order Type | Yes | Yes |
| Maker Fee (Example) | 0.10% | -0.025% (Rebate) |
| Taker Fee (Example) | 0.10% | 0.20% |
| User Interface | More Complex | More User-Friendly |
| Order Execution Guarantee | Yes | Yes |
As you can see, Bybit generally offers more favorable maker fee rebates, making it a potentially more rewarding platform for post-only order strategies. However, Binance's larger liquidity might lead to faster order fills in some cases.
Advanced Strategies and Post-Only Orders
Post-only orders aren’t just for saving on fees. They can also be incorporated into more sophisticated trading strategies:
- Dollar-Cost Averaging (DCA): Using post-only limit orders for DCA allows you to buy at specific price points over time, potentially improving your average entry price.
- Grid Trading: Post-only orders are essential for building a grid trading bot, which automatically places buy and sell orders at predetermined intervals.
- Algorithmic Trading: If you’re developing your own trading algorithms, post-only orders can be a key component for minimizing fees and maximizing efficiency.
Understanding these advanced applications requires further study. Resources like The Basics of Trading Futures on Electronic Platforms can provide a foundation for understanding the broader context of electronic trading.
Important Considerations for Beginners
- Order Book Understanding: Before using post-only orders, it’s essential to understand how the order book works. Learn to read the buy and sell orders to gauge potential price levels.
- Patience: Post-only orders may not fill immediately. Be prepared to wait for the market to reach your desired price.
- Price Fluctuations: Market prices can move quickly. Your order might not be filled if the price moves away from your limit price.
- Partial Fills: Your order might only be partially filled if there isn’t enough liquidity at your desired price.
- Cancellation: If your order isn’t filled after a reasonable period, consider cancelling it and adjusting your price.
- Start Small: Begin with small order sizes to get comfortable with the process before risking larger amounts.
The Role of Gamification and Exchange Platforms
Modern crypto exchange platforms are increasingly incorporating elements of gamification to attract and retain users. As explored in The Role of Gamification in Crypto Exchange Platforms, features like leaderboards, badges, and trading competitions can add an element of fun and engagement. While gamification can be beneficial, it’s crucial to remain focused on sound trading principles, such as minimizing fees through strategies like post-only orders. Don't let the excitement of gamified features distract you from your trading goals.
Risk Management and Hedging
While post-only orders help minimize trading costs, they don't eliminate risk. Understanding risk management techniques is paramount. Strategies like hedging, discussed in Hedging Strategies in Crypto Futures: Minimizing Risk in Volatile Markets, can help protect your portfolio against adverse price movements. While this resource focuses on futures, the underlying principles of risk mitigation apply to spot trading as well.
Conclusion
Post-only orders are a powerful tool for minimizing trading fees and improving profitability. By understanding how they work on platforms like Binance and Bybit, and by incorporating them into your trading strategy, you can gain a significant edge. Remember to start small, be patient, and always prioritize risk management. As you become more comfortable with the basics, you can explore more advanced applications and refine your trading approach. Successful crypto trading requires continuous learning and adaptation.
Recommended Futures Trading Platforms
| Platform | Futures Features | Register |
|---|---|---|
| Binance Futures | Leverage up to 125x, USDⓈ-M contracts | Register now |
| Bitget Futures | USDT-margined contracts | Open account |
Join Our Community
Subscribe to @startfuturestrading for signals and analysis.