fees

Zero Fees – A Mathematical No Brainer

With the Digitex Futures Exchange continuing to onboard more users and showing steady growth in volume and liquidity daily, it’s starting to become evident that it can thrive as the outlier of all Bitcoin Perpetual Futures Exchanges. Being the only place that traders can swap contracts with no fees lost to the house is such a powerful advantage for traders that soon, it won’t make sense to trade anywhere else.

Since Digitex opened its doors on the 27th of April, I have been lucky enough to be one of the early access participants and have had the opportunity to trade with no commissions. I do not consider myself to be a highly experienced trader. Before trading on the Digitex platform, my trading experience sums to perhaps 20 trades total using ByBit and Binance accounts, reading a book or two, and investing in the odd index fund. I barely broke even on my trades and decided the time investment was more than it was worth, so I stopped. 

But in just 15 days of trading on Digitex Futures, I turned my modest initial balance of 3,000 DGTX into 8,100 DGTX, corresponding to an increase in funds of 270%. Although a small balance, it’s a large relative gain and I believe was only achievable due to the potential that zero-fee trading presents to traders. 

Specifically, compounding funds that would otherwise have been spent on fees into growing your trading balance.

Compound Interest

Compound interest is possibly the most powerful financial tool on the planet. Warren Buffet attributes his investing success to this investment technique and Albert Einstein once described it as the 8th wonder of the world.

Compounding is the process of exponentially increasing the value of your investment by reinvesting any profits so that the capital on which you generate profits is continuously growing. As your capital is continuously growing, it generates larger profits which are then added to your capital to generate even larger profits. This is repeated enabling your investment to grow exponentially over the years. If you have no knowledge of compound interest, I highly recommend you spend some time learning about it.

Now, the reason this is important and relevant to the Digitex Futures Exchange, is because of the zero-fee model. Paying no commissions on trades opens up a whole new realm of possibilities when trading.

Keeping Fees vs Paying Fees

I believe the best way to emphasize this point is by playing out a scenario comparing the same trading movements on Digitex, Binance, BitMEX, and ByBit. In this scenario I will compound all profits into the trading balance and use the entire balance for the next trade. Fees will be considered and, for the sake of simplicity and emphasis, all fees will be taker fees at the rates of the respective exchanges. 

The analysis will assume the same trade repeated representing a 0.1% movement in Bitcoin. We are assuming no losing trades for the purposes of comparison.

Because Digitex has a zero-fee structure, this analysis is delving into the benefits of trading small gains, corresponding to two tick movements on the Digitex ladder. In each case, we are starting with an initial trading balance of $1,000. 

365 Trades

A trade a day keeps hunger away. The below comparison tables plots the same, small movement trade repeated 365 times. This could be a daily 2 tick trade or packed into whatever timeline your trading strategy dictates but what is immediately evident is that adding fees to your trading balance instead of losing fees to exchanges can significantly help grow your capital and increase your odds of success.

Zero Fees – A Mathematical No Brainer 1

Zero Fees – A Mathematical No Brainer 2

Both BitMex and ByBit see negative returns while Binance and Digitex Futures are positive. With a starting balance of $1,000, trading this strategy on the Digitex Futures platform would generate 3 times as much profit across 365 trades than its closest competitor.

3,650 Trades

Although across 365 trades, Binance looks like it competes with Digitex, I’m now about to present to you the power of compounding. Over time, small percentages compounded amount to extensive returns. Across 3650 trades, no other platform on the market can keep pace with the potential that Digitex offers its traders. Where both ByBit and BitMex have fed on over 80% of your capital, Digitex has helped you to nearly 40x returns.

Zero Fees – A Mathematical No Brainer 3

Zero Fees – A Mathematical No Brainer 4

10,000 Trades

The real power of compounding gets ludicrous at upper levels and you’d be lucky to be able to fill enough contracts to do this, but just for fun let’s look at 10,000 successful 0.1% trades. You’ll notice I had to put this on a logarithmic scale to see the other platforms’ performance compared to Digitex.

Enough said really.

Zero Fees – A Mathematical No Brainer 5

Zero Fees – A Mathematical No Brainer 6

Summary

Compounding your investments is a financial tool to facilitate exponential growth in your finances. In trading, compounding your trading balance can have the same effect. When compounding, small percentages amount to huge returns over time. What looks like small trading fees on exchanges such as ByBit, BitMex, and Binance can amount to lost opportunity when considered across a larger time frame.

Digitex Futures allows traders to not only operate but thrive within the margins where other platforms produce a loss due to high fees. If a trader can manage to compound these fees into their trades, they have a significantly higher chance of being successful.

Remember, exchanges aren’t built on winners, they’re built on fees.

Until now.