I’ve recently been chatting with several contract traders and found that many people don’t have a thorough understanding of the fee structure for perpetual contracts, especially regarding contract trading fees. So I’ve organized my own understanding here.

First, let’s talk about the most intuitive part: the trading costs of perpetual contracts mainly consist of two components: one is the transaction fee paid for each trade, and the other is the funding rate during the holding period. Many people tend to overlook these hidden costs, and as a result, more frequent trading makes the transaction fees become the biggest expense.

Regarding how to calculate contract trading fees, the logic is actually quite simple. There are two scenarios for opening and closing positions: one is placing an order (maker), and the other is a market order (taker). A maker is when you input a price and wait for it to be filled; a taker is when you execute immediately at the current market price. The mainstream platform’s basic fee rates are roughly: 0.02% for makers and 0.05% for takers. As long as you’re not buying or selling at the current price, whether it’s take profit or stop loss, it counts as a maker order. So, in reality, many people’s contract fees are lower than they imagine.

How exactly is it calculated? The formula is the position value multiplied by the fee rate. For example, suppose you use 100x leverage with a principal of $600, then the position value is $60,000. If you open a position with a market order, the fee is $60,000 × 0.05% = $30. When closing with a market order, it’s another $30; if you close with a limit order, it might only be $12. So, a complete contract trade can cost between $24 and $60 just in fees. Considering that trading is often long-term, this accumulated cost should not be ignored.

Next is the funding rate, which is more special. It’s not fixed. The main purpose of the funding rate is to balance the long and short positions in the market. When there are many longs, the funding rate becomes positive, meaning long holders pay a fee based on their position value, while short holders can earn the fee. Conversely, when there are many shorts, the funding rate turns negative, so longs receive money and shorts pay.

Funding rates are usually settled at 00:00, 08:00, and 16:00 every day. Only positions held at these times will actually be charged or credited. So, if you want to reduce the costs of contract fees and funding rates, besides choosing to trade with limit orders, you should also pay attention to the long-short ratio changes and settlement times. These details may seem insignificant, but over long-term trading, the difference can be quite substantial.