How Does Zero-Fee Crypto Trading Impact Your ROI? 1

How Does Zero-Fee Crypto Trading Impact Your ROI?

Trading
• Digitex
April 26, 2021

Nearly all cryptocurrency exchanges on the market charge fees for each trade on their platform to keep their business profitable.

While it’s a viable business model used by many brokers in the traditional finance industry, trading costs hurt the profitability of traders even when they seem very low.

For that reason, the next-generation cryptocurrency exchange Digitex has entirely eliminated trading costs on its platform to offer a zero-fee experience for its traders both on the spot and Bitcoin derivatives markets.

In this article, we will show how zero-fee trading impacts our users’ ROI.

More Profits Per Trade

All types of trading fees – such as spreads and commissions – take away a portion of your hard-earned profits.

For example, suppose a cryptocurrency exchange charges 0.15% per trade. In that case, it will take 0.15% from your initial amount when you open a trade, and you will pay another 0.15% after the value your order gets filled at when exiting your position.

While the initial 0.15% hurts your chances of winning trades (more on this later), the second fee takes away a part of your profits (or increases your losses if your ROI is in the negative).

In reality, this works out as follows:

  • You enter and exit 100 positions to trade one BTC futures contract for $1,000 each time, from which you win 60 and lose 40
  • You make a $30 profit on each of your winning trades ($1,800 in total)
  • You lose $20 on the other 40 trades ($800)

As a result, your gross profit equals $1,000. However, since the crypto exchange charges a 0.15% fee on each of your trades, your net profits will decrease to $848.50 ($1000 – $1,545 x 60 + $1.47 x 40).

While a 0.15% fee doesn’t seem like much at first, the exchange ate over 15% of your profits in the above example, which effectively decreases your ROI. Imagine if you were using leverage! That fee would also be increased proportionally as well, which is a huge chunk of your profit.

On the other hand, if you trade on Digitex with zero fees, you will keep 100% of your gains, which would save you $151.50.

Moreover, in the above example, we didn’t even take compound interest into account, which is a powerful financial technique investor legend Warren Buffet used to achieve success on the market.

By compounding interest, you continuously reinvest your trading profits to generate an even better ROI in the long run.

Increased Chances of Winning Trades

In addition to making more profits, zero-fee trading also improves your chances of scoring winning trades.

Since Digitex doesn’t impose a fee when you enter a new position (and won’t be charging any other costs at all), you will start every trade with a 50-50% chance of winning or losing.

For example, as part of your crypto trading strategy, you will exit profitable trades after Bitcoin’s price goes up 1%.

On the other hand, you place a stop-loss order for each of your positions, which will automatically get triggered after the BTC price decreases by 1%.

Say there’s always a 50% chance that the BTC price will surge by at least 1% and also a 50% chance that it will move down by a minimum of 1% with every additional 0.1% gains or losses decreasing the probability by 2%.

On a zero-fee crypto trading platform, this would look like the following:

Realized Profit and Loss (minimum) Probability
+1.1% 48%
+1% 50%
-1% 50%
-1.1% 48%

As you can see, since there are no costs involved, the trader has a real 50% chance to win or lose trades in the above example.

Now, let’s see how this would work out on a digital asset exchange where traders enter every trade with a 0.1% loss due to trading costs.

Realized Profit and Loss (minimum) Probability
+1.1% 46%
+1% 48%
+0.9% 50%
-0.9% 54%
-1% 52%
-1.1% 50%

Since you paid 0.1% to the exchange for entering the position and started with a loss, your odds of scoring a winning trade have decreased to 48%, while the chances for losing one increased to 52%.

And this leads to an even worse scenario if you use a high-frequency crypto trading strategy like scalping, where you aim to take even smaller profits than in the above examples.

Let’s say that you seek to make a profit of 0.2% while triggering a stop-loss each time your realized PnL decreases by 0.2%. Like in the above example, you would have the same 50-50% chance of winning/losing at a zero-fee platform like Digitex with scalping.

On the other hand, you would face serious losses on a crypto exchange that takes a 0.1% cut from traders:

Realized Profit and Loss (minimum) Probability
+0.2% 30%
+0.15% 40%
+0.1% 50%
-0.1% 90%
-0.15% 80%
-0.2% 70%
-0.25% 60%
-0.3% 50%

As you can see from the table above, a 0.1% trading fee would lead to only a 30% chance of winning trades.

For that reason, since the risk/reward ratio was 1:1 in our example, trading at a crypto exchange with such costs will result in serious losses with this crypto trading strategy.

Supercharge Your ROI With Zero-Fee Trading at Digitex

By now, it has become clear that zero-fee trading is an excellent way to boost your ROI on the cryptocurrency market.

Eliminating trading costs not only leads to scoring more profits on your trades but also increases your chances of winning them.

Are you ready to supercharge your ROI while enjoying a zero-fee trading experience on both the crypto spot and futures markets?

Sign up for an account at Digitex now!

April 26, 2021
Trading

How Does Zero-Fee Crypto Trading Impact Your ROI?

Digitex
How Does Zero-Fee Crypto Trading Impact Your ROI? 2

Nearly all cryptocurrency exchanges on the market charge fees for each trade on their platform to keep their business profitable.

While it’s a viable business model used by many brokers in the traditional finance industry, trading costs hurt the profitability of traders even when they seem very low.

For that reason, the next-generation cryptocurrency exchange Digitex has entirely eliminated trading costs on its platform to offer a zero-fee experience for its traders both on the spot and Bitcoin derivatives markets.

In this article, we will show how zero-fee trading impacts our users’ ROI.

More Profits Per Trade

All types of trading fees – such as spreads and commissions – take away a portion of your hard-earned profits.

For example, suppose a cryptocurrency exchange charges 0.15% per trade. In that case, it will take 0.15% from your initial amount when you open a trade, and you will pay another 0.15% after the value your order gets filled at when exiting your position.

While the initial 0.15% hurts your chances of winning trades (more on this later), the second fee takes away a part of your profits (or increases your losses if your ROI is in the negative).

In reality, this works out as follows:

  • You enter and exit 100 positions to trade one BTC futures contract for $1,000 each time, from which you win 60 and lose 40
  • You make a $30 profit on each of your winning trades ($1,800 in total)
  • You lose $20 on the other 40 trades ($800)

As a result, your gross profit equals $1,000. However, since the crypto exchange charges a 0.15% fee on each of your trades, your net profits will decrease to $848.50 ($1000 – $1,545 x 60 + $1.47 x 40).

While a 0.15% fee doesn’t seem like much at first, the exchange ate over 15% of your profits in the above example, which effectively decreases your ROI. Imagine if you were using leverage! That fee would also be increased proportionally as well, which is a huge chunk of your profit.

On the other hand, if you trade on Digitex with zero fees, you will keep 100% of your gains, which would save you $151.50.

Moreover, in the above example, we didn’t even take compound interest into account, which is a powerful financial technique investor legend Warren Buffet used to achieve success on the market.

By compounding interest, you continuously reinvest your trading profits to generate an even better ROI in the long run.

Increased Chances of Winning Trades

In addition to making more profits, zero-fee trading also improves your chances of scoring winning trades.

Since Digitex doesn’t impose a fee when you enter a new position (and won’t be charging any other costs at all), you will start every trade with a 50-50% chance of winning or losing.

For example, as part of your crypto trading strategy, you will exit profitable trades after Bitcoin’s price goes up 1%.

On the other hand, you place a stop-loss order for each of your positions, which will automatically get triggered after the BTC price decreases by 1%.

Say there’s always a 50% chance that the BTC price will surge by at least 1% and also a 50% chance that it will move down by a minimum of 1% with every additional 0.1% gains or losses decreasing the probability by 2%.

On a zero-fee crypto trading platform, this would look like the following:

Realized Profit and Loss (minimum) Probability
+1.1% 48%
+1% 50%
-1% 50%
-1.1% 48%

As you can see, since there are no costs involved, the trader has a real 50% chance to win or lose trades in the above example.

Now, let’s see how this would work out on a digital asset exchange where traders enter every trade with a 0.1% loss due to trading costs.

Realized Profit and Loss (minimum) Probability
+1.1% 46%
+1% 48%
+0.9% 50%
-0.9% 54%
-1% 52%
-1.1% 50%

Since you paid 0.1% to the exchange for entering the position and started with a loss, your odds of scoring a winning trade have decreased to 48%, while the chances for losing one increased to 52%.

And this leads to an even worse scenario if you use a high-frequency crypto trading strategy like scalping, where you aim to take even smaller profits than in the above examples.

Let’s say that you seek to make a profit of 0.2% while triggering a stop-loss each time your realized PnL decreases by 0.2%. Like in the above example, you would have the same 50-50% chance of winning/losing at a zero-fee platform like Digitex with scalping.

On the other hand, you would face serious losses on a crypto exchange that takes a 0.1% cut from traders:

Realized Profit and Loss (minimum) Probability
+0.2% 30%
+0.15% 40%
+0.1% 50%
-0.1% 90%
-0.15% 80%
-0.2% 70%
-0.25% 60%
-0.3% 50%

As you can see from the table above, a 0.1% trading fee would lead to only a 30% chance of winning trades.

For that reason, since the risk/reward ratio was 1:1 in our example, trading at a crypto exchange with such costs will result in serious losses with this crypto trading strategy.

Supercharge Your ROI With Zero-Fee Trading at Digitex

By now, it has become clear that zero-fee trading is an excellent way to boost your ROI on the cryptocurrency market.

Eliminating trading costs not only leads to scoring more profits on your trades but also increases your chances of winning them.

Are you ready to supercharge your ROI while enjoying a zero-fee trading experience on both the crypto spot and futures markets?

Sign up for an account at Digitex now!

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