Percent Fee
Percent fee is a fee calculated as a percentage of trade notional. The fee increases with both price level and position size.
Definition
Percent fee is a fee computed as a percentage of the trade’s notional value. In prediction markets, notional is typically proportional to contract price times quantity.
Why it matters
Percent fees scale with price level. Two trades of the same size can pay different fees if executed at different prices. This matters for measuring net edge and for comparing markets.
How to incorporate it
• Compute effective spread without fees.
• Convert percent fee into a per contract fee unit using execution price, then compute all in cost.
Common pitfalls
Assuming percent fees are small: In wide spread or thin markets, percent fees can materially change net results.
Incorrect fee base: Always confirm whether the platform charges percent on notional, on premium, or via another rule.