Do exchanges earn from future trades ?

When a position is liquidated , does the amount goes to other traders who put their bet on opposite ? Or does the entire amount goes to exchange directly ?

awesomewebsites said:

When a position is liquidated , does the amount goes to other traders who put their bet on opposite ? Or does the entire amount goes to exchange directly ?

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I have been curious about this as well. I always wondered whether exchanges actually profit from those liquidations or if it just balances out between traders.

jimmycort1 said:

I have been curious about this as well. I always wondered whether exchanges actually profit from those liquidations or if it just balances out between traders.

Click to expand...

No one answered this yet. I think there is less information about this publicly available.

Exchanges charge trading fees they profit from those, if a trader is liquidated the money "lost" is taken by the market makers which are then distributed to those in profit. It is the same on every medium whether forex, crypto, stocks etc. Market makers use programs that executes buy and sell in micro seconds they are the one in charge of handing money to every traders, they provide liquidity to markets. Without them you will wait for someone to specifically buy your asset instead the instant transaction offered by trading the market.

Though it is safe to assume that every exchange have their own market makers there are others that work individually.

There is also funding fee if you are unaware. This is paid to the traders by the trader regularly and the exchange does not have any profit from it.

Yes, you also pay a higher trading fee % when opening a leveraged trade.

the liquidated amount typically goes to the exchange, covering losses, and may not directly benefit other traders

On futures, liquidation losses usually go to opposing traders or an insurance fund; exchanges earn mainly from fees, not directly from liquidations.