Fee drag: what trading fees cost you over a year

CoTrading editorial team 2026-09-23

Fee drag is the share of your equity that trading fees remove over a period. It is the product of three terms — the round-trip fee rate, the notional you trade per position as a multiple of equity, and the number of round trips — so a rate that looks negligible per trade can remove a large fraction of an account over a year.

This page is for traders who know their fee rate and want to see what it adds up to at their actual activity level. It is the annual view; the per-trade view — whether a single trade’s target justifies its round trip, and when maker beats taker — is in maker vs taker fees. By the end you will be able to estimate your own drag, model it in a compounding projection, and see which of the three terms is doing the damage.

The formula

Fees are charged on notional, not on margin or profit. Per round trip, as a fraction of equity:

cost per round trip = round-trip rate × (notional ÷ equity)

Over a year, holding equity constant for simplicity:

annual fee drag ≈ round-trip rate × notional multiple × round trips per year

If your position size tracks your equity — a fixed fraction, re-sized each trade — the fee on each trade is taken from a slightly smaller base, and the exact version is:

fraction of equity removed = 1 − (1 − c × L)^N

where c is the round-trip rate, L the notional multiple and N the number of round trips. Both versions assume zero gross result, which isolates the fee term; the real account adds whatever the trades themselves did.

How large it gets

All fee rates below are illustrative, not any venue’s schedule. Rates depend on venue, tier, trailing volume and discounts, and change often.

Fraction of equity removed in a year at an illustrative 0.10% round trip (0.05% per side), by trade count and notional multiple:

Round trips per year	0.5×	1×	2×	3×	5×
50	2.5%	4.9%	9.5%	13.9%	22.2%
100	4.9%	9.5%	18.1%	26.0%	39.4%
250	11.8%	22.1%	39.4%	52.8%	71.4%
500	22.1%	39.4%	63.2%	77.7%	91.8%
1,000	39.4%	63.2%	86.5%	95.0%	99.3%

And the effect of the rate itself, at 250 round trips a year:

Illustrative round trip	1× notional	3× notional
0.04% (maker both sides at 0.02%)	9.5%	25.9%
0.07% (maker in, taker out)	16.1%	40.9%
0.10% (taker both sides at 0.05%)	22.1%	52.8%

The three terms multiply, so none of them is safe to ignore. Doubling any one of them roughly doubles the drag until the compounding flattens it.

A worked example

Illustrative: a 10,000 USD account, each trade at 3× equity in notional (30,000 USD), 250 round trips a year, 0.10% round trip.

Fee per round trip: 30,000 × 0.10% = 30 USD.
Over the year at constant size: 30 × 250 = 7,500 USD, or 75% of starting equity.
Notional traded: 30,000 × 250 × 2 sides = 15,000,000 USD, which is 1,500 times the account.
If size shrinks with equity, the exact fraction removed is 1 − (1 − 0.003)^250 = 52.8%.

Either way, the trades collectively have to produce that much gross result before the account is back to flat. Nothing about the individual trades has to be bad for this to happen; the account is settled net.

Notice what drives it. The 3× multiple is often not a deliberate choice — it falls out of tight stops, because a tight stop implies a large position for the same risk budget. Fee drag scales with notional, so it scales inversely with stop distance.

Modelling it as a negative return

The compounding calculator accepts a negative rate per period, which makes it a fee-drag model.

Take the example above at 20 round trips a month: 20 × 3 × 0.10% = 6% per month. Enter −6% for 12 periods and the calculator shows 52.4% of the balance gone — close to the exact per-trade figure of 51.4% for 240 round trips, and the small gap is only the monthly grouping.

Then use it the other way. Whatever gross return you are modelling, the fee drag is subtracted from it every period before compounding. A projection that leaves fees out is compounding a number the account never receives.

The trading fee calculator gives the per-trade and per-month figures at your own rates; its “fees per month” line is the input for this step.

These two numbers answer different questions, and mixing them up is how drag goes unnoticed.

Per-trade share — round trip divided by the gross move you are targeting — tells you whether a trade is worth taking. At a 0.10% round trip, a 1% target loses 10% of its gross to fees; a 0.2% target loses half.

Annual drag tells you whether an activity level is sustainable. A trader can have a comfortable per-trade share and still carry heavy annual drag, because the per-trade figure says nothing about how often the trade repeats or how large the notional is relative to the account.

Fees are also only one of the costs between gross and net. Slippage scales with size relative to book depth and is not quoted anywhere. Funding scales with holding time on perpetuals and annualises in its own way — see annualised funding cost. A full cost budget adds all three.

The three levers

Since drag is a product, each term is a lever:

Fewer round trips. The most direct. Halving turnover roughly halves the drag.
Lower notional multiple. Wider stops mean smaller positions for the same risk, which pays fees on less notional. See position size including fees for folding the fee into the sizing formula itself.
Lower blended rate. If a share m of your fills are maker, the blended per-side rate is m × maker + (1 − m) × taker. With illustrative rates of 0.02% and 0.05%, moving from 0% to 50% maker fills cuts the per-side rate from 0.05% to 0.035%. The cost of doing so is adverse selection on fills, which is real and does not appear in the schedule.

Which lever is cheapest depends on your approach. A strategy that needs frequent small trades cannot cut turnover without becoming a different strategy; one with tight stops can often widen them.

Getting your real rate

Venue fee schedules are tiered by trailing volume and sometimes by balance or token holdings, and they change, so this page does not list any. The venue-specific fee calculators explain how each schedule is structured: Binance, Bybit, OKX and Hyperliquid. Read the current rate from your own account’s fee page and enter it yourself.

FAQ

How do I calculate annual fee drag?

Multiply your round-trip fee rate by the notional you trade per position as a multiple of equity, then by the number of round trips in a year. If you size positions as a fraction of current equity, use 1 − (1 − c × L)^N instead, which accounts for fees coming out of a shrinking base. Both assume zero gross result, so they isolate the cost.

Why is my fee drag so much higher than my fee rate?

Because the rate is charged on notional, twice per round trip, and repeated every trade. A 0.10% round trip at 3× notional costs 0.3% of equity per trade, and 250 of those remove roughly half the account before any gross result is counted. The rate is small; the multiplier and the repetition are not.

Does leverage increase fee drag?

Indirectly. Fees are charged on notional, so what matters is notional relative to equity. Leverage lets you hold more notional per unit of margin, and tight stops push position size up for a fixed risk budget; both increase the notional multiple, and drag rises with it.

Should I include fees in a compounding projection?

Yes. Subtract the per-period fee drag from the per-period return before compounding, or model the fees alone as a negative rate. A projection that leaves them out compounds a gross figure the account never receives, and the gap widens every period.