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The order book and maker/taker fees

Lesson 9 · about 9 min

A spot crypto exchange is a plain order book, the same structure as a stock or futures exchange, and the Trading 101 course covers bids, asks and spreads in general. This lesson covers what is specific to crypto: how fees are charged, why they are much larger than they look, and how the book behaves on a 24/7 market with no designated market makers.

The book, briefly

Buyers post bids (the price they will pay); sellers post asks (the price they will accept). The highest bid and lowest ask form the spread. A market order crosses the spread and takes whatever is resting there; a limit order rests in the book waiting to be hit.

Crypto books are quoted in the pair's quote currency, almost always a stablecoin. BTC/USDT at 60,000 means one bitcoin costs 60,000 tether. Nothing in the book is denominated in real dollars, which matters when a stablecoin's peg wobbles.

Maker and taker

Every trade has two sides: the order that was resting (the maker, because it made liquidity) and the order that crossed the spread to hit it (the taker, because it took liquidity). Exchanges charge each side a different fee, always in favour of the maker, because resting orders are what make the exchange usable.

Typical retail-tier spot fees on a large exchange:

Side Fee On a $10,000 trade
Maker 0.10% $10
Taker 0.10% $10

Many exchanges start makers and takers at the same rate and separate them at higher volume tiers, where maker fees fall towards zero and takers stay around 0.04% to 0.06%. Some offer a discount for paying fees in the exchange's own token. Perps (Module 4) run lower: roughly 0.02% maker and 0.05% taker are common.

Why 0.1% is not small

A fee of 0.1% sounds negligible. It is charged on the full trade value, on both entry and exit, so a round trip costs 0.2% of the position. Compare that with what you are trying to make:

  • A trade risking 1% of the position value to make 2% pays 0.2% in fees: 10% of the expected gain, before slippage.
  • A scalp aiming for 0.5% pays 0.2%: 40% of the target gone to fees.
  • A trader making 20 round trips a week at 0.2% each spends 4% of their capital per week on fees. Over a year that is more than double the account.

This is why active crypto traders obsess over fee tiers and post limit orders. The difference between paying 0.1% taker and 0.02% maker on a busy account is the difference between a positive and a negative year.

Key idea: Fees are charged on notional, on both sides, and they compound with frequency. Work out your round-trip cost as a percentage of your typical target, and if it is above about 10%, either trade less often, use limit orders, or aim for bigger moves.

Limit orders and the fill problem

Posting a limit order at the bid earns the maker rate but does not guarantee a fill. If the price runs away, you miss the trade; if the price comes back to fill you, it is often because the move is going against you (this is called adverse selection). Neither is a reason not to use limits; it is a reason to understand that a maker fill is a slightly worse-quality entry on average than a taker fill, in exchange for the lower fee.

A workable compromise for a beginner: use limit orders for entries you can wait for, and market orders for exits that must happen now, especially stops.

No designated market makers

On stock exchanges, firms are obligated to quote continuously. Crypto exchanges have no such obligation. Professional market-making firms quote the major pairs because it is profitable, and they withdraw their quotes the moment it is not: during sharp moves, outages, or news. That is why the spread on BTC can go from 0.01% to 0.5% in seconds during a crash, and why a market order placed into that moment gets a fill nobody would accept in calm conditions.

On smaller alts there may be no professional maker at all; the book is other retail traders and the project's own liquidity, and it can be effectively empty at 3 a.m. on a Sunday.

Reading depth

Most exchanges show a depth chart: cumulative bids on the left, cumulative asks on the right. Two things to look for:

  • Thickness near the price. Thin near the price and thick far away means the visible book will barely slow a move.
  • Walls. Single very large orders sitting a few percent away. They are frequently pulled before the price reaches them; do not trade against a wall as if it were a floor.

Try it: Find your exchange's fee schedule. Write down your current maker and taker rate. Then take your last ten trades (or ten imaginary ones at your usual size) and compute the total fees paid and the total gross profit or loss. Fees as a percentage of gross is the number to watch.

Recap

  • Crypto spot is a normal order book quoted in a stablecoin, with no obligated market makers.
  • Makers rest orders and pay less; takers cross the spread and pay more. Retail spot is typically around 0.1% each side.
  • Fees are charged on the full notional both ways and compound with frequency; a 0.2% round trip can eat most of a small target.
  • Limit orders earn the maker rate but risk missing fills and adverse selection; use market orders when the exit must happen.
  • Spreads widen violently in fast markets because makers withdraw; do not trust walls in the book.

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Bid-ask spread in an order bookSell orders stacked above buy orders with a gap between the best of each.SELLERS (asks)50.0690050.051,40050.0460050.011,10050.002,30049.99800spread = 0.03BUYERS (bids)
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.
Market, limit and stop ordersA price track crossing a resting limit order below the market and a stop order above it.10410210098PriceTime (the market moves left to right)priceSTOP BUY at 103.00waits above the market; becomes a market order when touchedtriggers hereMARKET ORDERfills at once at 100.60filled hereLIMIT BUY at 98.50rests below; fills only at 98.50 or better
Market, limit and stop orders. A market order buys straight away at whatever price is there. A limit order waits below until the price comes to it, and a stop order sits above and turns into a market order the moment price touches it.
Risk and reward on one tradeA price scale showing an entry with a stop two points below and a target six points above, so the reward band is three times the risk band.PRICETARGET 106.00ENTRY 100.00STOP 98.00REWARDRISK6.00 pointsthree times the risk2.00 pointsthe most you loserisk : reward = 1 : 3
Risk and reward on one trade. One trade on a price scale: the entry sits 2.00 points above the stop and 6.00 points below the target, so the shaded reward band is three times the risk band. The ratio compares what is lost if the stop is hit with what is gained if the target is reached.