Market orders, limit orders, fees and slippage
The price on the screen is not always the price you pay. Here is how orders work and where the hidden costs come from.
- A market order buys immediately at the best available prices. A limit order only fills at your price or better.
- You pay fees on every trade, usually on the way in and on the way out.
- Slippage is the gap between the price you expected and the price you got. It is worst on thin, fast-moving markets.
Market order: fast, but you accept the price
A market order says “buy now at whatever the sellers are asking”. It fills straight away, but each seller wants a slightly higher price than the one before, so a bigger order can push your average price up.
Limit order: you set the price
A limit order says “buy only at this price or lower”. It may never fill if the price does not come back to you. You trade certainty of price for uncertainty of getting filled. Many exchanges also charge lower fees for limit orders that wait in the order book.
Stop orders: your exit plan
A stop-loss order sits dormant until the price reaches a level you chose, then turns into an order to sell. A stop-market sells at the next available price. A stop-limit sells only at your limit price or better, which means it might not fill in a fast drop. Check how your exchange labels them before you rely on one.
Maker and taker fees
A maker adds an order to the order book and waits. A taker removes an order from the book by trading right away. Exchanges often charge takers more than makers. The exact rates depend on the exchange and on your trading volume, so always check your exchange’s fee table.
Spread and slippage
The spread is the gap between the highest price a buyer offers (bid) and the lowest price a seller asks (ask). Wide spreads are a sign of a thin market.
Slippage is the difference between the price you expected and the average price you actually got.
You want to buy 1,000 USDT of a small coin showing 1.000. There is not enough for sale at 1.000, so your order fills across several prices and your average comes out at 1.012. That is 1.2% slippage, or 12 USDT, before any fees.
A full round trip costs more than you think
If your exchange charges 0.1% per trade, buying and then selling costs about 0.2% in fees. Add 0.3% of slippage each way and you need roughly 0.8% in price gain just to break even. On a coin that moves 1% a day, that is most of a day’s move.
This is why very frequent trading can lose money even when most of your calls are right.
How to keep costs down
- Use limit orders when you are not in a hurry.
- Check the order book depth before placing a large market order.
- Prefer well-traded coins and well-traded trading pairs.
- Trade less often. Every trade has a cost.
- Count the fees in your plan before you enter. The position size calculator does this for you.
Common mistakes
- Using a market order on a thinly traded coin.
- Placing a stop-limit and assuming it always sells.
- Ignoring fees on small, frequent trades.
- Converting between coins several times when one trade would do.
Enter your balance, the loss you accept and your stop. It shows how much to buy, with fees included.