Digitex Futures is the world’s first cryptocurrency futures trading platform to offer no-fee trading. Other exchanges in the crypto futures markets charge traders based on a maker and taker fee model.
Digitex CEO Adam Todd made his career on the back of a style of trading known as scalping. Scalping is an extremely short-term, high-frequency trading style that aims to take small, most often single-tick profits from each trade. Scalp traders often exit a position within minutes or seconds if they don’t see an immediate profit.
The scalping style of trading described here is the easiest to learn, requires no specialized knowledge about the underlying instrument and will give you steadier, less volatile results. However, it requires a lot of discipline and this style of trading is particularly susceptible to the ravages of the maker and taker fee model of crypto futures exchanges.
Let’s illustrate this with an example. In the traditional German Bund futures markets where Adam started his career, scalpers could successfully trade in this manner because the value of one tick on the Bund was 25 Deutsch Marks and the commission to buy and sell one futures contract was less than 3 Deutsch Marks. Traders would also get a scratch trade rebate every time they bought and sold at the same price.
Traders only had to make one tick for every 10 round turns to break even, and anything over that was profit. It was a lot harder than it sounds. But it was possible because the commission fee to buy and sell one futures contract was one-tenth of the value of one tick.
Currently, this style of short term scalping on fee-charging cryptocurrency futures exchanges is literally impossible. The commission cost of buying and selling one futures contract with a taker order is more like 10 times the value of one tick. There’s a built-in mechanical edge that you cannot beat, and which guarantees you will lose over the long run.
In the current BitMEX fee model, the taker fee is 0.075% of the notional value of the underlying instrument. That may look small, but if you’re trading with 100x leverage that’s actually 7.5% of the margin you put down to enter the trade. If you exit the trade with a Taker order, your trading fees are 15% of the order value!
For example, total fees on a $1,000 trade with 100x leverage are $150 [100 x $1,000 x 0.00075 x 2]. How can you ever expect to beat a 15% edge working against you?
At Digitex, our exchange derives its value from the DGTX token, not from charging fees to our traders who are providing liquidity to the exchange. This commission-free trading model is what attracts traders to our exchange. Demand for the opportunity of profitable zero-fee trading will drive the value of the DGTX token as the only means of accessing our platform.