6 / 7 · 5 min
The real cost of a trade: why the account shrinks on correct entries
Fees are only the first of four costs. Until you add all four, you do not know how far price must move for you to break even.
A beginner thinks: "bought at 100, sold at 101, made a percent". In reality four payments sit between those two numbers, and on short trades they eat more than half the result.
What the cost consists of
- Entry fee — from 0.02% (maker) to 0.06% (taker) on most exchanges.
- Exit fee — the same again.
- Spread — paid once on a market entry, and once more on a market exit.
- Slippage — the gap between the price you saw and your average fill.
- Funding — if the position survived at least one charge.
This is the distance price must travel in your favour before you start earning anything. Everything shorter than that is a loss, even when you called the direction correctly.
A liquid coin against a thin one
BTC, market in and out: fees 0.05% × 2 = 0.1%, spread 0.005%, slippage near zero. Break-even: 0.105%. A small coin turning over $200k: same 0.1% in fees, spread 0.4%, slippage 0.3% in and 0.3% out. Break-even: 1.1% — ten times more. The same strategy earns on the first coin and loses on the second, and the strategy has nothing to do with it.
How far price must move to break even
| Instrument | Fees | Spread | Slippage | Break-even |
|---|---|---|---|---|
| BTC, limit orders | 0.04% | 0.005% | ≈0 | 0.045% |
| BTC, market orders | 0.10% | 0.005% | ≈0 | 0.105% |
| Mid-cap coin | 0.10% | 0.05% | 0.05% | 0.25% |
| Small coin | 0.10% | 0.40% | 0.60% | 1.10% |
Testing a strategy without costs
The idea showed +0.4% per trade on closing prices — looks wonderful. You run it on a small coin where break-even is 1.1%, and every "profitable" trade returns −0.7%. The strategy did not break; it was simply never tested under the conditions it had to work in. Any test without fees, spread and slippage overstates the result several times over — confirmed by our own research too.
Why this hurts scalping most
The shorter the trade, the larger the share of its result the threshold takes. A scalper targeting 0.3% on BTC with market orders gives a third of the target to costs. A swing trader targeting 8% gives roughly one percent of it — a thirtyfold difference. Hence the rule: the shorter your horizon, the more instrument liquidity matters and the more compulsory limit orders become.
What to do about it
- Enter with limit orders where possible: the maker-taker gap doubles or triples your margin for error.
- Trade instruments with tight spreads. Turnover in the screener is a direct proxy: the higher it is, the tighter the spread.
- Compute break-even before entering, not after. If the target is under three thresholds, there is no trade.
- On long-held positions, budget funding into the target as a separate line.
Our paper trading charges fees like a real exchange, so the trade journal shows results net of costs. Run a dozen trades of your idea through it — the gap between "how far price went" and "what is left in the account" will be larger than you expect.
Open paper tradingYour target is 0.5% and break-even is 0.25%. Is this a good trade?
No. Half the target goes to costs, so even at a 60% win rate you barely break even. A sane boundary is a target at least three times the threshold; at 0.25% that means 0.75% or more. Either switch to a more liquid instrument or to a longer horizon.
Why does "the same" strategy stop working when you move from BTC to a small coin?
Because break-even moves with the coin — from 0.1% to a percent and beyond. The strategy did not change, the price of entering it did. Whatever earned 0.4% per trade loses on the new instrument; to earn there, the target must grow at least threefold.