Unit 2 · Level 1 · How Exchanges Work
Fees, spreads & slippage
Every trade costs you three ways: the FEE the exchange charges, the SPREAD between bid and ask, and SLIPPAGE when your order moves the price. Each is small on its own, but frequent traders bleed from all three.
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What you get asked
Match the cost to its source
You pay all three on essentially every trade; most beginners only notice the first.
You buy €1,000 of BTC with a 0.1% fee. What's the fee?
0.1% of €1,000 = €1. Sounds tiny, but trade in and out daily and fees quietly become your biggest opponent.
You trade in AND out of a position 50 times with 0.1% fee each way. Roughly how much of your money went to fees?
100 executions × 0.1% ≈ 10% of your capital. THIS is why overtrading destroys accounts even when the trades themselves break even.
Getting filled at a worse price than you expected is called ___.
Worst in fast markets and thin books. Limit orders are your main defense.
Two exchanges list the same coin. One has a tight spread and deep order book; the other, wide spread and thin book. Where do you trade?
The spread is a cost you pay twice, once entering and once exiting. Liquidity is a feature you should shop for.
Time to touch the calculator: you buy €2,000 of BTC and the exchange charges a 0.1% taker fee. How many euros is the fee?
€2,000 × 0.001 = €2. Feels tiny, but 100 round trips at this size is €400 in fees alone. Fees are a tax you pay whether you win or lose.
True or false: a trade that gains 0.5% before costs is always a winning trade.
Your REAL profit is after all three costs. Pros compute cost-per-round-trip before choosing how often to trade. You now think about this; most beginners don't. Unit boss awaits! 👑
The rest of this unit
Order books, order types, stop-losses, and the silent costs of every trade.