Crypto Trading: Binance Fees Explained & Tricks to Reduce Them (Beginners' Guide)

by Andrea Unger | Technical

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Today we‘re going to talk about trading cryptocurrencies and, more specifically, the costs involved in trading this market through one of the largest exchanges in the world, Binance.

By watching the video, you’ll find out the actual costs for:
-Depositing money (traditional or crypto currency)
-Converting traditional money or cryptocurrencies to trade on the most liquid crosses
-Performing buy and sell transactions on the spot and futures markets

In the video, you’ll also find some valuable tips to limit the impact of commissions and avoid additional costs due to slippage.

Enjoy! 😎

Transcription

Introduction

Hey everyone, one of the coaches at Unger Academy here and welcome to this brand-new video.

Now, despite the somewhat bearish trend in the cryptocurrency sector as a whole, systematic intraday trading on this asset is still a viable alternative to traditional futures.

So today, in this video, I'm going to be showing you what are the real costs for those who want to start trading on a cryptocurrency exchange from scratch.

Okay, so in this video, we’re going to be discussing the costs of trading cryptos, and in particular, we’ll use one of the world's largest crypto exchanges, namely Binance, as a reference.

Step 1: Deposit FIAT

Let's start from the beginning. Let's imagine we’re a new user on Binance, and we don’t have anything in our account yet.

The first thing that we do is, we need to deposit money on this exchange.

So let's go to our Dashboard. Now, in the Overview of our account, we can go and make a deposit.

We can either deposit crypto or FIAT. FIAT means Euros, Dollars, Pounds, etc.

Let’s assume we have never used cryptocurrencies before, so we own only FIAT and so we need to make a deposit of FIAT.

So the first cost, that is, for a Euro deposit, it costs us 1€ regardless of the deposit.

Of course, we also have some alternatives. We can use a credit card, but the costs are too high so I wouldn't recommend that.

We can also use other methods, like P2P or others, but to be honest, I don’t recommend those either.

So, the first cost, let's say, is 1€ for the first transaction.

Step 2: Buy USDT

Okay, so assuming that we have made our first deposit in Euros on Binance, what we need to do after we get to that point is to convert those Euros into crypto.

Because it isn’t enough to have Euros in your Binance account to trade because on Binance, as on any other exchange, it’s much more convenient to trade the most liquid currency crosses or pairs.

For example, if we want to trade Bitcoin on Binance, what we can go and do is go to the Bitcoin-USDT cross.

USDT is the token pegged to the US Dollar, that is, that cryptocurrency that follows the trend of the US dollar.

And in this way, we can trade, that is, we can buy or sell, Bitcoin through USDT or US Dollars.

So in order to do this, the second step we need to take is to convert our Euros into USDT.

To do this, we have several alternatives offered by Binance, including the Binance Converter, which is cited as the easiest way to convert anything.

You can convert with market or limit orders, but I strongly advise against it because you see, the commission costs are not clear enough, and you don't know what the price trend is, what the book is.

So I recommend you go directly to the spot market and look for the EURO-USDT cross. Here it is.

In this case, we'll have to be buying USDT.

Because remember that on this EURO-USDT cross, we should sell our Euros.

So, we’ll enter the amount in Euro that we’ve just deposited, or in this way we can deposit all our Euros into the account.

After that, we’ll sell the Euros. Of course, there’s a cost, but we’ll see that shortly.

Once this is done, let's go and see what happened to our account. If we go to Wallet > Fiat & Spot, we’ll find ourselves with our Euros, if we have left some, and our USDT which we've just bought.

Once we reach this point, we can start trading.

We have USDTs, so we can buy Bitcoin or other cryptocurrencies on the Binance spot market.

Costs - Spot Trading

There’s only one thing that's missing: defining the cost of such transactions. We’ve already seen that we can buy or sell Bitcoin through the spot market with USDT or any other currency. But where are the costs listed?

Well, the costs are listed in the Dashboard, so let's go to our account. Let's go to the Dashboard. And at the bottom right of this page, you’ll see "Trading Fees."

On the "Trading Fees" page, you’ll find an overview of all the trading costs.

In particular, now we will just refer to Spot trading, which is what most investors are generally interested in.

Because as you probably know, there are some countries where people can only use Spot trading, while Coin futures or USD futures can’t be used.

But we’ll go and see those costs later as well.

As far as spot trading is concerned, as normal or regular users, our trading fee, that is to say our cost, should be 0.1% for both maker orders and taker orders.

Maker orders are those orders that create liquidity in the book, such as a limit order.

Taker orders are instead orders that remove liquidity from the book, such as a market order or a stop market order.

My advice to you is to consider buying some BNBs. If you don't know what it is, BNB is Binance's cryptocurrency.

Because what's interesting is that Binance allows you, by owning this cryptocurrency, to pay trading fees directly in BNB. And this entitles you to a 25% discount on transactions, which isn’t bad at all.

So as a regular user, buying some BNBs should be enough to cover part of the commission fees.

Because in this way, you'll be charged fees of 0.075%.

Moreover, if you have a slightly larger account, I’d advise you to go and buy at least 25 BNB.

For the current price of BNB, which is about $250, that’s a little over $6,000 in BNB.

This would give you an additional discount because by buying 25 BNB you’d pass as a VIP1, so your account type would become a little more privileged than a regular user, and in atcase, the costs would drop further to 0.067%.

That’s as far as I’d go, because you know, the risk of holding too many BNBs could lead to excessive risk with this particular coin.

Costs - Futures Trading

Let's also take a quick look at the costs related to trading on futures.

The costs of futures are much lower but differ between maker and taker.

Binance offers two different types of trading fees. One is for the USDT market, and the other is for the market with BUSDs.

BUSDs are simply tokens pegged to the US Dollar, similar to the USDT, but on the Binance blockchain.

Of course, the market is much less liquid right now in terms of trading BUSD, and that's why, in my opinion, it remains more convenient to trade pairs on USDT, even if the fees are almost double than on BUSD.

The costs go from 0.02% to 0.012% for maker orders, and from 0.04% to 0.03% for taker orders.

Final Thoughts

In summary, commission costs are pretty high but still very competitive.

Speaking of Spot trading, if we were to use USDT-based crosses, the liquidity would be really very high.

So, you'd be less likely to get a considerable slippage. Because let's not forget that slippage is one of the main costs for systematic traders like us.

So even with very high commission costs, this 0.1%, it would still be much cheaper compared to other trading approaches.

In addition, Spot trading is scalable and, therefore, easily accessible even for people that have less capital available.

And with that, I really hope that this basic overview has been helpful to you.

If you need help to start investing in the markets with a systematic trading approach as we do at Unger Academy, I invite you to click on the link that you find in the description of this video. It will take you to a page where you’ll find some very handy resources. From there, you can sign up for a free presentation by Andrea Unger, our founder and the only 4-time world trading champion, or you can get our best-selling book, "The Unger Method," covering only the shipping costs, or you can even book a free call with a member of our team to receive a free strategy consultation.

Finally, if you have not already, I’d like to remind you to please subscribe to our channel, click on the notification bell so that you'll be notified immediately when new videos like this one and new content are released. Again, if this video was helpful to you, please leave us a Like, leave us a comment.

And with that, that's all for today! We will see you soon in our next video! Bye bye for now!

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Andrea Unger

Andrea Unger

Andrea Unger here and I help retail traders to improve their trading, scientifically. I went from being a cog in the machine in a multinational company to the only 4-Time World Trading Champion in a little more than 10 years.

I've been a professional trader since 2001 and in 2008 I became World Champion using just 4 automated trading systems. 

In 2015 I founded Unger Academy, where I teach my method of developing effecting trading strategies: a scientific, replicable and universal method, based on numbers and statistics, not hunches, which led me and my students to become Champions again and again.

Now I'm here to help you learn how to develop your own strategies, autonomously. This channel will help you improve your trading, know the markets better, and apply the scientific method to financial markets.

Becoming a trader is harder than you think, but if you have passion, will, and sufficient capital, you'll learn how to code and develop effective strategies, manage risk, and diversify a portfolio of trading systems to greatly improve your chances of becoming successful.