Calculating returns: fees, leverage, margin and APR
Funding arrives bit by bit, while fees and the price spread are paid up front. Using two illustrative examples — perp + perp and spot + perp — we count how many payments break-even takes, how leverage changes returns and the liquidation buffer, and why “APR 200%” in a calculator promises nothing.
The main beginner mistake is looking only at the rate. Funding arrives in small portions every few hours, while fees, the price spread and slippage are paid up front. So first we count how many payments it takes just to break even.
What the result is made of
- Funding: position size × rate difference × number of payments.
- Fees: four trades — entry and exit on two legs. A reference point is Binance’s base tier: futures about 0.02% maker and 0.05% taker, spot 0.1% (0.075% when paying in BNB). Your account’s exact rates are on the exchange’s fee page; VIP tiers lower them.
- Price spread: the price difference between the long and the short at entry minus the difference at exit. If prices converge, a negative entry spread becomes a loss.
- Slippage: a market order on a thin book fills worse than the expected price.
- Transfers: network fees if you have to move USDT between exchanges to rebalance.
Example A. Perp + perp on two exchanges
Illustrative parameters: capital $2,000, $1,000 of margin on each exchange, leverage 2× — a $2,000 position per leg. A rate difference of 0.05% per 8 hours, all trades as taker at 0.05%.
| Item | Calculation | Amount |
|---|---|---|
| Fees for 4 trades | 4 × $2,000 × 0.05% | −$4.00 |
| One payment | $2,000 × 0.05% | +$1.00 |
| Fee break-even | $4.00 ÷ $1.00 | 4 payments (32 h) |
| Funding over 7 days | 21 payments × $1.00 | +$21.00 |
| Result before price spread | funding − fees | +$17.00 (+0.85% on capital) |
| Entry price spread | −0.10%, prices converged by exit | −$2.00 |
| Total | before taxes | +$15.00 (+0.75% on capital) |
| Rate difference per 8h | 1 day | 3 days | 7 days | 14 days |
|---|---|---|---|---|
| +0.01% | −0.17% | −0.11% | +0.01% | +0.22% |
| +0.03% | −0.11% | +0.07% | +0.43% | +1.06% |
| +0.05% | −0.05% | +0.25% | +0.85% | +1.90% |
| +0.10% | +0.10% | +0.70% | +1.90% | +4.00% |
The key takeaway: at a 0.01% difference per 8 hours the position only breaks even by the end of the week and earns about 0.2% on capital in two weeks, while over a single day everything except the largest differences is in the red. Funding arbitrage means holding for days, not hours, and setups with a stable rate difference.
Example B. Spot + short perp on one exchange
We buy $1,000 of the coin on spot and open a $1,000 short with $500 of margin (2× leverage). Capital is $1,500. Fees: spot 0.1% on the buy and the sell, and futures 0.05% on opening and closing — $3.00 in total.
| 8h rate | One payment | Fee break-even | 30-day result | On capital |
|---|---|---|---|---|
| +0.01% | $0.10 | 30 payments | $6.00 | +0.40% |
| +0.03% | $0.30 | 10 payments | $24.00 | +1.60% |
At the baseline 0.01% a small position barely earns anything: spot fees eat the first ten days. The scheme makes sense with an elevated and stable rate, low fees or large amounts.
Leverage and the liquidation buffer
Leverage does not change income per position, but it changes income on capital: at 2× the same margin gives twice the position and twice the funding. The flip side is that liquidation is closer. For a short in isolated margin, the liquidation price is roughly entry price × (1 + 1/leverage − maintenance margin rate).
| Leverage | Margin for a $1,000 position | Price rise to liquidation |
|---|---|---|
| 1× | $1,000 | ≈ 99.5% |
| 2× | $500 | ≈ 49.5% |
| 3× | $333 | ≈ 32.8% |
| 5× | $200 | ≈ 19.5% |
| 10× | $100 | ≈ 9.5% |
In perp + perp, a price rise brings profit to the long on one exchange and a loss to the short on the other. The profit cannot be moved instantly, so the short is liquidated just as if there were no hedge. Coins with high funding are often the most volatile too — for them, leverage above 2–3× turns a “neutral” position into a lottery.
Why APR from one day misleads
An annualized return (APR) is the income for a period stretched to a year. 0.01% per 8 hours is 10.95% a year; 0.1% per 8 hours is already 109.5%. Calculators do the math correctly, but a high rate rarely lasts more than a few days. So calculate the result of a specific trade over a realistic period and compare it with the average from the rate history, not the best payment.
Frequently asked questions
How many payments does it take to cover fees?
Divide the fees for four trades by one payment. In the illustrative example (a $2,000 position, 0.05% taker, 0.05% rate difference) that is 4 payments, or 32 hours.
What leverage should I use?
The more volatile the coin, the lower the leverage. For high-funding coins 1–3× is sensible: at 5× a short is liquidated after roughly a 19–20% price rise, at 10× after 9–10%.
Why does the calculator show a huge annual return?
It stretches a short period’s income to a year at a constant rate. High rates rarely last, so APR from one day is not a forecast.
How can I cut fees?
Enter with limit orders (maker is cheaper than taker), use VIP tiers and discounts for paying fees in the exchange token, and hold longer so fees are spread over more payments.
Sources
- 1.Binance Futures Fee Structure & Fee CalculationsBinance5/1/2026official
- 2.Binance Fee ScheduleBinance
- 3.How to Calculate Liquidation Price of USDⓈ-M Futures ContractsBinance12/31/2025
- 4.What Are Isolated Margin and Cross Margin in Crypto Trading?Binance Academy5/7/2026
- 5.Funding | Hyperliquid DocsHyperliquid
- 6.P2P.Army: funding rate arbitrage scannerP2P.Army10/31/2026
About the author
Crypto expert, arbitrage trader and investor
Crypto expert and hands-on crypto arbitrage trader, investor and software developer with over 20 years of experience. On the P2P.Army blog he covers exchange news, P2P and cross-exchange arbitrage.
- Crypto arbitrage
- P2P arbitrage
- Cross-exchange arbitrage
- Crypto exchanges
- Investing
- Software development
