The motive for trading cryptocurrencies is to make as much profit as possible. However, this requires much planning and timing of transactions. In this article, we will discuss ways in which an individual can increase his/her trading profit by reducing transaction fees.
Take your time: Wait it out
One of the major determinants of transaction fees is the trading volume at a specific time. When the trading volume of a cryptocurrency is high, the gas fee is normally high. And when the trading volume is lower, so is the fee. Despite this fact, many exchanges have minimum transaction fees which are unavoidable.
Therefore, the best strategy is to carry out a transaction when the trading volume is at its lowest point. This requires careful study and patience. The good news is that there are resources on the internet which indicate the time when the gas fee for a particular cryptocurrency is at its lowest. One such platform is mempool.space. Here a trader checks the current transaction fees of bitcoin.
Using exchanges which have low fees
There is no single transaction fee for all exchanges and wallets for a particular cryptocurrency. Therefore, the best thing to do is to find exchanges which have comparatively low transaction fees. Overall, this increases the long-term profit level of a trader.
With some exchanges, traders do not pay trading fees. They only get a charge when withdrawing their earnings.
Avoiding use of credit cards and fund the exchanges instead
Although it is very convenient to buy cryptocurrencies using credit cards, the accompanying fees are usually very high. This is because banks profit from the charges. As a fact, the normal bank charge for such services averages 3 percent. Thus, if an individual relies mainly on credit cards to buy cryptocurrencies, they lose much money over a long period.
In contrast, a trader benefits more by funding his/her exchange using fiat. Significantly, the charges for using fiat currency are lower than those of credit cards.
Understanding the fee structure
Another great way to reduce transaction cost is to understand fee structures of various exchanges. The most important thing a trader needs to do is to study the fee structure of the exchange he/she is using. Sadly, some exchanges have low upfront fees, yet with backend charges.
On the other hand, some apps have lower fees for some cryptocurrencies but higher rates for others. Thus, a trader should not assume that a certain exchange has low fees across the board. Blanketing the fee structure of an exchange or wallet may cause huge trading losses.
Using free maker option
Sometimes, traders can use already deposited funds as transaction fees, an option which may prove less costly than in a normal situation. With this system, an individual can place a maker buy order. This may enable the individuals to buy cryptocurrencies at lower market prices than otherwise. This is because such exchanges have limit orders, where traders give commands or instructions to execute specific trades at certain price ranges.
Making use of new offers
Usually, many exchanges have friendly offers for new users to attract and retain them. For example, they ask traders to open their trading accounts and benefit from lower trading fees. On the other hand, they may offer you trading discounts which can increase your profit level.
Conclusion
In a nutshell, traders should take advantage of trading options that exist in the market to increase their profit level. Consequently, individual traders should keep scanning the crypto market for best offers.
