How are volume-based fee schedules applied to HFT crypto trading?

Question

I am trying to understand how volume-based fee schedules would work with a high frequency trading algorithm.
Let's say I am trading 1 BTC and I am averaging 1000 trades every 5 minutes.
Does the fee schedule apply to the price of the entire bitcoin traded 1000 times in those 5 minutes?
For example, on Binance the Maker/Taker fee schedule for <50 BTC is: 0.1000% / 0.1000%. Does that mean every one of those 1000 trades in those 5 minutes will rack up 0.1% of the price of a bitcoin?
Let's say for one profitable trade, with one BTC buy @ $23737.00, and one BTC sell @ $23751.00, with a presumed profit of $14, would the fee for the buy = $23.737, and the fee for the sell = $23.751, making the total fee for both transactions = $47.488?
If so, how would it ever make sense to trade with an HFT algo? The fees would seem to outweigh any profits an HFT algo could eek out of trading.
Or am I misunderstanding fee schedules completely?

CQM · Answer

People trading in high frequencies use a mixture of exchanges where they have lower commissions and strategies where they have a greater edge per trade.
With many exchanges, lower and more favorable commissions arrangements can be negotiated, and they are more interested in volume than one single customer. Money talks.
In more established markets, exchanges typically offer rebates for the liquidity maker and only the taker pays commissions. You can see a similar trend playing out on crypto exchanges.

How are volume-based fee schedules applied to HFT crypto trading?

One Answer

Add your own answers!

Ask a Question