A trading fee or brokerage fee is the money charged by exchange or an OTC platform for the services provided by them. It is like a service charge collected by these exchanges or OTC platforms for the services rendered by them.
For an exchange, the trading fee is the primary source of revenue. However, the trading fee is an expense for you as an investor or a trader.
Therefore, your net trade value can be calculated as follows:
Case 1 – in case you buy a cryptocurrency
Net Buy Cost = (Purchase Cost of the cryptocurrency) + (Trading Fee)
Case 2 – in case you sell a cryptocurrency
Net Sales Value = (Sales Value of the cryptocurrency) – (Trading Fee)
Trading fees are also an important criterion that you need to consider when picking an exchange for yourself. Your goal should be to find an appropriate crypto exchange that has high liquidity and low trading fees.
Also, a lot of exchanges offer exchange tokens which help you reduce the trading fees. For example, if you are using the BNB token to pay your trading fees on the Binance exchange, you will reduce your trading fees by 25% for the first few years, which is a significant saving in the longer run.