Recently, a friend asked about the fee structure of perpetual contracts, so I’ll give a brief overview. The main costs are trading fees and funding rates.

First, let’s talk about the trading fees. Anyone who has traded contracts knows that the fee rates for placing orders and taking orders are different. Maker orders (also called limit orders) have a fee of 0.02%, while taker orders (market orders) are 0.05%. It may not seem like a big difference, but over time, this gap can add up.

How is it calculated? It’s quite simple: the trading fee equals the position value multiplied by the fee rate. For example, if I open a position with $600 of capital at 100x leverage (not recommended to do this in real trading), the position size would be $60,000. Placing a market order to open the position would cost 60,000 × 0.05% = $30 in fees. And that’s just for opening.

When closing the position, you pay again. If you close at market price, it’s another $30; if you close with a limit order, it might be cheaper, around $12. So, executing a full contract trade can cost between $24 and $60 just in fees. Over the long term, these costs can become significant.

Next is the funding rate, which is quite interesting. The funding rate isn’t fixed; it adjusts dynamically based on the market’s long-short ratio, mainly to balance market forces. When the funding rate is positive, long position holders pay, and short position holders earn; when it’s negative, the opposite happens. The calculation is straightforward: position value multiplied by the funding rate.

Funding rates are usually settled at 00:00, 08:00, and 16:00 UTC daily. Positions held at these times will be charged or credited accordingly. If you want to avoid paying funding in a certain direction, many traders close their positions before the settlement time.

Overall, trading contracts involves several costs—trading fees and funding rates must both be considered. Some traders focus only on potential profits and overlook these hidden costs, only to find that fees eat up a large portion of their gains. That’s why experienced traders pay close attention to the maker-taker fee differences and the direction of the funding rate.