Fees, spread and slippage: the hidden cost of crypto trading
Every trade pays a fee before it starts. Here is how much it really costs, and why short-term traders feel it most.
Every trade pays three costs:
- Spread: the gap between the buy and sell price. You start every trade slightly negative.
- Commission or fees: charged per lot or as a percentage (exchanges often charge maker/taker fees on each side).
- Slippage: the difference between the price you wanted and the price you got, largest around news and in fast markets.
Why costs matter more for short trades
Costs are fixed per trade, but profit grows with the stop size. With $0.40 of costs on gold:
| Stop | Costs as a share of 1R |
|---|---|
| $20 | 2% |
| $5 | 8% |
| $2 | 20% |
A strategy that makes +0.2R per trade before costs can become break-even after costs if its stops are tight. This is why you should always judge results after estimated brokerage, and why backtests without costs flatter results.
What you can control
- Avoid trading in the first seconds after major news.
- Prefer limit orders when the strategy allows.
- Trade fewer, better setups; overtrading multiplies costs.
- Log your fees in the journal so your R is honest.
Quick check
Costs hurt most when…
Answer: stops are tight and trades are frequent. Fixed costs are a larger share of a small R, and frequency multiplies them.
Frequently asked questions
What is slippage in trading?
Slippage is the difference between the price you expected and the price you got, most common around news and in fast markets.
Why do costs matter more for scalping?
Costs are roughly fixed per trade while the stop distance is small, so costs become a larger share of each unit of risk.
Educational content only, not investment, legal or tax advice. Trading carries a substantial risk of loss. See our risk disclosure.
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