I was always curious about day trading. What about you?
Did you ever calculate what's the minimum trade that you have to make to stay profitable? I did and I would like to share it with you!
I took as example the Binance exchange where the trading fees are 0.1% even if you are a MAKER or a TAKER and can get get even lower to 0.075% if you choose to pay the fees in BNB tokens (Binance tokens) - if you are interested you can create an account here
Let me define these 2 words, maybe are new to you:
a) MAKER = when you set a specific amount to buy/sell, for example for the pair DOT/USDT you set the limit order to buy DOT at 34.1235 USDT
b) TAKER = when you buy/sell at the market price at that moment when you press the sell/buy button
Now, let me show you my calculations with the 0.1% fees. Let's take as an example DOT/USDT:
Explanation:
- 1st row: we have 100 USDT and want to buy DOT at the price of 1 DOT = 35.7944 USDT so my division we will get back 2.793733098 DOT and we have to subtract the 0.1% fee from this value which is 0.00279373 DOT this means that the total amount we'll get is: 2.790939365 DOT;
- 2nd row: we want to find out when we can sell out DOT back to USDT in order to make a small profit, basically the smallest profit - it seems that when the DOT price increase with 0.0717 USDT (0.2003% increase) we can sell to be on profit, the profit is really small, but this was the experiment;
- 3rd and 4th rows: illustrate the same thing as now with the current USDT we buy again DOT and sell it again when it goes up a little bit; we have the same ration here of 0.2003% increase to stay profitable;
Let me give you another example with pair EGLD / USDT as 1 EGLD = 139.2142 USDT:
We start here with 100 USDT (100$) also so want to show you that even if the cryptocurrency has a higher price, in this example with 100 USDT we'll get 0.718317528 EGLD from which we have the fee 0.00071832 so in total we'll get 0.71759921 EGLD. If we want to be on profit when we sell the EGLD the difference should be the same in percentage 0.2003% like for DOT / USDT pair.
So if you want that your trade to be profitable with a 0.1% fees in day trading, 0.2003% increase in that specific pair is the number.
Maybe the profit is very small, but think how many opportunities of price differences are in a day. Have in mind also that we trade with 100$ (100$ ~= 100 USDT). What if we trade with a bigger amount? Like 200$ or 500$ or 1000$? Maybe I will cover this in another blog also, let me know in the comments if you would like to.
Binance is known for it's vast cryptocurrencies trading pairs and also for the small fees of just 0.1%. You can get in buying cryptocurrencies with credit/debit card or depositing from another source to start trading. If you would like to try it out and get 5$ bonus when you sign up you can use my referral link here and you will get 5$ bonus when you buy crypto worth of 50$.
Let me know in the comments down below if you have any questions and what other exchanges are you using with low fees?
Have a nice day,
CryptoCata
