Transaction fees on different exchanges can be paid in various ways.
For example, some exchanges like Binance, Yobit, and Gate.io have their internal currency for fee payments. For Binance, this currency is BNB.
Moreover, when paying fees with the exchange’s native tokens, discounts are often given. Binance offers a 25% discount when paying fees in BNB.
And any discount, as we know, increases income.
“A penny saved is a penny earned.” – B. Franklin
However, not all exchanges have internal currencies and such tools, and they charge fees directly from the order execution result.
This affects the calculations of trading bots.
When making long trades, the bot buys an asset with the intention of selling it at a higher price.
For example, the bot buys 1 ETH. The exchange fee will be approximately 0.001 ETH (0.1%), so the result of the transaction will be 0.999 ETH instead of 1 ETH in your account.
Therefore, in order to secure the profit, the bot will not be able to sell 1 ETH, and the take-profit will be set for 0.999 ETH.
It is also important to note that it is not always possible to sell the entire accumulated volume.
For instance, if you buy 0.01 ETH, the fee for it will be 0.00001 ETH, and you will receive 0.00999 ETH.
However, each exchange sets a permissible number of decimal places for prices and order volumes for each trading pair.
For the ETH/USDT pair, the limitation for the order volume is 4 decimal places. This means that you can only sell 0.0099 ETH, while 0.00009 ETH will remain in your balance as a “deadweight.”
Such leftovers will accumulate as the number of transactions increases.
You can either accumulate these leftovers or convert them into another cryptocurrency. Many exchanges offer the option to convert small amounts into a unified exchange token (such as BIT for Bybit or BNB for Binance).
When making short trades, the bot sells an asset intending to buy it back at a reduced price.
Short trades avoid the issues mentioned earlier since the profit percentage covers the commissions. However, when making short trades, the deposit decreases.
For instance, the bot sells 1 ETH for 2000 USDT per unit. It receives 1998 USDT after deducting the exchange commission of 2 USDT. Even with a profit percentage of 0.5%, the target price would be around 1990 USDT, which is sufficient for the take-profit.
However, when the exchange executes the take-profit and buys 1 ETH for 1990 USDT, it will deduct a commission from the ETH, resulting in 0.999 ETH remaining.
The more trades are executed, the more commissions the exchange will withhold from the deposit.
Therefore, it is recommended to have a small reserve of coins in addition to the deposit when making short trades.