The real costs of trading futures and why trade frequency matters

Futures trading isn't free, even when you're right

When we talk about our approach to altcoin investing, we emphasize that we trade futures most of the time . This gives us the ability to profit in both rising and falling markets. But futures come with costs that every investor should understand, because these costs directly affect your bottom line.

There are two main costs that accumulate when you hold open positions in perpetual futures: funding rates and transaction fees. Neither one will ruin you on its own, but together, they shape how often you should trade and how long you should hold.

Funding rates: the invisible cost of staying in the market

Perpetual futures contracts don't have an expiration date, which is what makes them so flexible for traders. But to keep the futures price aligned with the spot price, exchanges use a mechanism called the funding rate.

Here's how it works: every eight hours (on most exchanges), a small fee is exchanged between long and short traders. As Coinbase explains, when the futures price is above the spot price, the funding rate is positive, and longs pay shorts. When the futures price is below spot, the rate is negative, and shorts pay longs.

The formula is straightforward: Funding Fee = Position Value x Funding Rate. If you hold a $10,000 position and the funding rate is +0.01%, you pay $1 every eight hours. That's $3 per day, or roughly $90 per month, just for keeping the position open.

These numbers sound small, but they compound. As BingX's analysis notes, during periods of heavy bullish sentiment, funding rates can spike to 0.05% or higher per interval. At that rate, a $10,000 long position would cost $15 per day, or $450 per month, in funding alone.

This is why holding a futures position open indefinitely is not a viable strategy. The funding rate is a slow drain on your capital, and it's one of the reasons buy-and-hold thinking doesn't work in futures markets, as we discussed in our post on why retirees should rethink their approach.

Transaction fees: the cost of every entry and exit

Every time you open or close a position, you pay a trading fee to the exchange. On platforms like Bybit and Bitget, these typically range from 0.02% (for maker/limit orders) to 0.06% (for taker/market orders).

That means opening and closing a single $10,000 trade costs between $4 and $12 in fees. Do that twice a week, and you're looking at roughly $400 to $1,200 per year, per asset, in transaction costs alone.

These costs are manageable when your trades are generating returns. But they become destructive when you overtrade. Every additional trade that doesn't contribute to your profitability is a pure cost.

Why roughly 100 trades per year per asset is our target

This is where strategy meets arithmetic. We aim for approximately 100 trades per year per asset, which translates to roughly two trades per week on average.

This number isn't arbitrary. It's the result of balancing two opposing forces:

Too few trades increases risk. If you only trade 20 times a year, each individual trade carries enormous weight. A single bad decision can devastate your annual performance. With so few data points, you also can't diversify across market conditions. You might catch one good trend and miss the next three.

Too many trades increases cost. Day traders who execute 5, 10, or even 20 trades per day face transaction fees that eat into every gain. Overtrading also leads to psychological fatigue, impulsive decisions, and a degradation in trade quality. Each additional trade needs to clear a higher bar just to break even after fees.

At roughly 100 trades per year, we operate in a zone where each trade is meaningful but no single trade is catastrophic. The fees are manageable. The frequency allows us to adapt to changing market conditions. And the pace gives us time to analyze each setup properly rather than reacting to noise.

Our goal isn't to win most trades, it's to win big when we win

Here's something that often surprises people: we don't aim to win significantly more than half our trades.

A 50-55% win rate might sound unimpressive, but win rate is only half the equation. The other half is how much you win versus how much you lose.

The formula that actually matters is expectancy: (Win Rate x Average Win) minus (Loss Rate x Average Loss). A trader who wins 50% of the time but averages $300 on winners and $100 on losers has a positive expectancy of $100 per trade. A trader who wins 70% of the time but averages $100 on winners and $250 on losers has a negative expectancy of -$5 per trade. The second trader wins more often but loses money overall.

Our strategy is built around this principle. We aim to make substantially more on winning trades than we lose on losing trades. This means we're disciplined about cutting losses short with strict stop-losses, and we're patient about letting winners run when the market confirms our thesis.

Losing is not failure. Losing is a built-in cost of trading, no different from the funding rate or the transaction fee. What matters is that your winners more than compensate for your losers, your fees, and your funding costs, combined.

Why this matters for copy trading followers

If you're following our trades through copy trading, understanding this framework helps set the right expectations.

You will see losing trades. You might see several in a row. That doesn't mean the strategy is broken. It means you're watching a process where roughly half the trades are expected to lose, but the average winner is significantly larger than the average loser.

You'll also notice that we don't trade every day. There will be quiet periods where we're waiting for the right setup. This is deliberate. As we've explained in our philosophy on trust and risk, we'd rather miss a marginal opportunity than take a trade that doesn't meet our criteria, because every unnecessary trade is a cost with no guaranteed return.

The traders who look the most active on leaderboards are often the ones paying the most in fees. Activity is not the same as profitability. Our approach prioritizes the latter.

The math behind sustainable trading

Let's put it all together with a simplified example. Imagine we trade a single altcoin, 100 times in a year:

We win 52 of those trades, averaging $250 per winning trade. We lose 48, averaging $100 per losing trade. Transaction fees total roughly $800 for the year. Funding costs add another $600 (assuming we manage position timing to minimize funding exposure).

Total profit: (52 x $250) minus (48 x $100) minus $800 minus $600 = $13,000 minus $4,800 minus $1,400 = $6,800 net profit on a single asset.

That's not the kind of number that makes viral screenshots. But it's real, it's repeatable, and it compounds. Over multiple assets and multiple years, this is how sustainable wealth is built.

The bottom line

Trading futures has real costs. Funding rates drain open positions over time. Transaction fees accumulate with every trade. And the more frequently you trade, the higher the bar your strategy needs to clear just to break even.

Our approach respects these realities. We trade roughly 100 times per year per asset, not so rarely that each trade becomes a high-stakes gamble, and not so frequently that costs erode our edge. We accept that losing trades are part of the process. And we focus our energy on ensuring that when we win, we win significantly more than when we lose.

This isn't the most exciting approach to trading. But it's designed to last.