Trading · 62 / 86
Fees, spread, and slippage
You pay to get in and you pay to get out. A hope that looks small can be smaller than those costs.
Three different costs
- The fee is the posted charge, often paid on the way in and again on the way out.
- The spread is the gap between the price to buy and the price to sell.
- Slippage is the fill moving away from the number on the screen.
A plain sum
Suppose you hope to make $10. It costs $6 to buy and $6 to sell. The fees are $12. You hoped for $10. You lose even if the price does what you wanted.
Doing it more often makes this worse. Every click can pay the costs again, including the clicks that work.
Run it on your own numbers
Use dollars for the size you mean to trade. If you do not know the spread, leave it at zero and treat the answer as the best case.
This adds the costs and compares them with the hope. It does not tell you to take a trade, and it does not say you made money.
Check yourself
If the price does exactly what you hoped, have you made that hope?
Not if the fees to enter and exit were already larger.
After this you can see whether the fees are already bigger than the hope, before you click.
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