What Is Maker & Taker? How to Reduce Transaction Fees?

Many newcomers to the crypto world must have heard of the two words: maker and taker, yet without much knowledge about the two. Still, some newbies find themselves confused about the transaction fees in the maker-taker mechanism. Here is one of the most common questions among them: why are my transaction fees so much higher than those of other market makers on the same trading platform?

So what is a maker and what is a taker? What can newbies do to save transaction fees? Below are some useful tips.

1) What is a maker? How to set a limit order (maker)?

Setting a limit order (maker) is providing liquidity. Specifically, it means that the user places an order with a certain quantity and price, but there is no order matching in the market. As a result, the order will always be in the market till someone concludes it. In this process, the maker provides liquidity for the entire market.

Simply put, market makers are those who are willing to wait to buy or sell at a certain price. They provide the depth for the market. In their case, it is a passive transaction. Setting a limit order refers to buying or selling cryptos at the specified price, and the transaction can be executed when the market price fluctuates to the price set by the user.

So how to set a limit order (maker)? Let’s do it step by step. Here we take buying/placing CET/USDT limit order (maker) in the spot market as an example:

  1. We suppose the current latest deal price for CET/USDT is 0.076502,and the selling price in the the current 1st place is 0.076502, as shown in the figure.
  2. Choose [Limit] type and [Always Valid].
  3. Set [Price] and [Amount]. Suppose we buy 500 CET when the price rests at 0.076430.
  4. Confirm [Est. Execution Value], and click [Buy CET].

After the order has been submitted successfully, it will be sent into the market and take the 1st buyer place. When the market price of CET fluctuates to 0.076430, the order will start to be executed step by step. The same goes for a limit order (maker) to sell.

2) What is a taker? How to set a limit order (taker)?

Setting a limit order (taker) is taking orders, and a taker is also called a liquidity consumer. In this process, after checking the prices of existing orders in the market of the exchange, a user proactively places an order with a certain quantity and immediately concludes the existing order. Simply put, users place an order that are are executed immediately with the maker in the queue, and take away liquidity from the market. In their case, it is a proactive transaction

How to set a limit order (taker)? Here is an example. Still, we take buying/placing CET/USDT limit order (taker) in the spot market as an example:

  1. We suppose the current latest deal price for CET/USDT is 0.075433, and the selling price in the current 1st place is 0.075507.
  2. Choose [Limit] type and [Always Valid].
  3. Set [Price] and [Amount]. Suppose we buy 99 CET when the price rests at 0.075507.
  4. Confirm [Est. Execution Value], and click [Buy CET].

After the order has been submitted successfully, because the amount that you want to buy is less than the selling amount of the current 1st place seller, the order will be executed by the price 0.075507 immediately. The same goes for a limit order (taker) to sell.

To sum up, the maker/taker mechanism encourages users to set a limit order early, in a bid to boost crypto trading and keep the price stable. It is noteworthy that whether an order is a maker or a taker is not decided by the status of the order when it is set, but the status when it is executed. If there are not enough opponents in the market, it must be a maker; but if an opponent appears and the order is executed the moment it is confirmed and submitted, it switches to a taker from a maker.

3) How to reduce the transaction fees in the limit order (maker & taker)?

Here is a solution for your reference: To apply for CoinEx Market Maker, you can enjoy fee discounts!

(Fees of Maker and Taker for CoinEx Contract Market Makers)
(Fees of Maker and Taker for CoinEx Spot Market Makers)

Take the spot market maker at Lv 5 as an example. Market makers can enjoy 0.05% fees (taker) and even 0 fees (maker). Below is a detailed example:

Say the transaction fee for a taker is 1 BCH. According to the corresponding fee rate, the actual payment is 0.0005 BCH (1 BCH * 0.05% = 0.0005 BCH). With the discount of using CET as fees (30% off), if the real-time rate of CET against 1 BCH is 5,000 CET, the final fee will be: 1.75 CET (0.0005 BCH * 70% * 5,000 CET /BCH = 1.75 CET).

What a bargain! Why not apply to be a market maker at CoinEx now?

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