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Sorry if this question is noobish. I thought I had the maker/taker fee mechanism figured out (already existing question at Maker taker fees - can somebody explain in plain english?); apparently I was wrong. Yesterday I put an order to sell LTC at EUR 45 on Kraken, while the market was still at about EUR 44.27. Today my order was filled. However, I was charged the taker fee instead of the maker fee for this transaction.

Why is that the case? I thought for a transaction to be charged the maker fee, the selling order only has to be higher than any of the buying orders that existed at that time? When I put out my order, wasn't it higher than all the buying orders on the market?

Is it because somebody before me already posted a selling order at EUR 45 and I was only adding volume to that already existing selling price, so I was charged the taker fee?

Or is it because when my order was finally filled, the most recent market price actually went above (bypassed) EUR 45, and then went down again?


EDIT: I got the following response from Kraken but I'm still confused:

Without selecting "Post Only Limit," the order will fill at your Limit as either a Maker or Taker order. The Limit is the only condition that was set. Even if you set the order hours ahead of time, other orders can exist on the order book that would predate your own. Especially at round numbers, like 45.00. You could try 44.99, and might have better luck.

I thought that I would only have the taker fee applied if there were already buying orders at the same price, and then I placed a selling order, thus “taking away” the already existing buying order. However, this response seems to imply that the taker fee would also apply if there were previous selling orders at the same price when I placed my order. Does that make sense?

  • Is EUR the base currency for fee calculation? Could a EUR/USD rate change have had impact? – Hart CO Oct 4 '17 at 15:21
  • @HartCO I don't think that involves currency rate conversion between EUR and USD. I've always been trading with EUR and there were some trades where I got the maker's fee. But not this time. – xji Oct 4 '17 at 15:33
  • I didn't expect a separate rate conversion to be involved, but not familiar with their operation. – Hart CO Oct 4 '17 at 15:39
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    Actually somebody from Kraken replied me on Reddit and said it might be a bug and that I should open a ticket. I did it and would wait to see what they say. – xji Oct 4 '17 at 15:54
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From your comments and edit it sounds like there may be a bug in your exchange's software. That seems entirely plausible for an unregulated industry like Bitcoin trading. (Note that the reason there may be fewer bugs on regulated exchanges is not necessarily the regulation itself but rather the vastly greater number of users affected when things go wrong.) You're smart to be watching your trade receipts so carefully.

When Kraken's (or any other exchange's) systems are working correctly then, by definition:

  • a maker order is one that cannot be immediately filled and therefore sits in the order book for any length of time
  • a taker order is one that can be immediately filled and therefore never enters the order book

Sometimes the market can move so quickly that your order appears to be filled instantly but in fact sat in the order book for a few milliseconds or seconds before being matched. That's still a maker order because for that brief period of time you were "making" liquidity -- you were adding to the list of resting orders that the exchange could advertise to other customers.

On the other hand, if the exchange has poor infrastructure, or if it offers tiered performance levels (which is entirely possible in an unregulated market), you could send an order that does not reach the matching engine until several minutes later. Then it might seem to you (because of the delay) like your order went into the book, when in reality it was executed immediately (upon reaching the matching engine) and therefore "took" liquidity and deserves the taker fee.

  • There was a reply from Kraken, but I still don't think I understand it... "Without selecting "Post Only Limit," the order will fill at your Limit as either a Maker or Taker order. The Limit is the only condition that was set. Even if you set the order hours ahead of time, other orders can exist on the order book that would predate your own. Especially at round numbers, like 45.00. You could try 44.99, and might have better luck." – xji Oct 4 '17 at 20:23
  • So if I understand it correctly, the reason why it was regarded as a taker order is that there were already other sell orders at the price 45.00 before I placed my order, and thus any later orders would always have the taker fee applied? If I want to get the maker fee, I should always put an order at which price there is no existing order yet, be it a selling order or a buying order? – xji Oct 4 '17 at 20:24
  • I thought that I would only have the taker fee applied if there was some buying order at the same price, and then I put up a selling order, thus “taking away” the already existing buying order. Is that not the case then. – xji Oct 4 '17 at 20:24
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    In my opinion that's dishonest of them. Most of the world understands a Limit Order to mean that your order goes into the book at that price. It sounds like Kraken treats a Limit Order to mean "stick this order on some list somewhere and when the price hits a certain point, execute it as a market order". If you use "Post Only Limit", however, it sounds like they will put your order in the book -- i.e. it will never execute as a taker. – dg99 Oct 4 '17 at 21:29
  • In fact, even their support page explains why you would want to use a Limit Order by pointing out how it's different from a Market Order. There's no mention on that page that you have to include Post Only to avoid them turning the order into a Market Order. If a real exchange tried to pull that, nobody would trade there. – dg99 Oct 4 '17 at 21:42

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