The Cost of Trading — botter.dev

What You Will Learn

The five layers of trading costs in crypto markets.
How “small” costs compound into account-killing drains.
How to measure your real execution costs.

The Core Idea

Beginners look at trading fees: “0.1%? That’s nothing.”

A botter calculates total cost: fees + spread + slippage + funding + gas. Often 0.3-0.5% per trade. Sometimes more.

If your strategy’s expected return per trade is 0.2%, and your real cost is 0.3%, you’re not trading—you’re donating.

The question isn’t “can I win trades?” It’s “can I win trades after costs?”

The Five Layers of Cost

1. Trading Fees

The most visible cost, but often the smallest part of the picture.

Maker vs. Taker: Taker fees (market orders) are typically 2-3x higher than maker fees (limit orders). On most CEXs, this means 0.04-0.1% taker vs. 0.02-0.04% maker.

CEX tiers: High-volume traders get fee discounts. But if you’re not in a VIP tier, you’re subsidizing those who are.

DEX fees: Uniswap V2 charges a flat 0.3%. V3 pools vary from 0.05% to 1% depending on the pair. Low-liquidity tokens often sit in high-fee pools.

2. Spread

The spread is the gap between the best bid and best ask. When you buy at market, you pay the ask. When you sell, you receive the bid. The spread is a cost you pay on every round trip.

BTC/USDT on major exchanges: Often under 0.01%—tight enough to ignore for swing trading.

Mid-cap altcoins: 0.1-0.5% spreads are common.

Low-liquidity tokens: Spreads can exceed 1%. A 1% spread means you’re down 1% the instant you enter.

Every market order pays the spread. Limit orders can avoid it—but at the cost of execution uncertainty.

3. Slippage

Slippage occurs when your order moves the market. If you’re buying more than what’s sitting at the best ask, you’ll fill at progressively worse prices.

Order book depth: On CEXs, slippage depends on how much liquidity sits at each price level. Thin books mean large orders get poor fills.

AMM price impact: On DEXs, every trade moves the price along the bonding curve. The larger your order relative to the pool, the worse your execution.

Volatility spikes: During high volatility, slippage explodes. The price you click is not the price you get. Backtests don’t capture this.

4. Funding Rate

Perpetual futures don’t expire, but they have a cost: the funding rate.

Funding is exchanged between longs and shorts every 8 hours (on most exchanges). When the market is bullish, longs pay shorts. When bearish, shorts pay longs.

During strong trends: Annualized funding can exceed 50-100%. Holding a long through a bull run sounds profitable—until you realize you’ve paid 30% of your gains in funding.

The hidden bleed: Funding accrues silently. Many traders don’t track it, then wonder why their P&L doesn’t match their expectations.

If you’re using perpetuals, funding is not optional math. It’s mandatory.

5. Gas and MEV

On-chain trading adds two more cost layers.

Gas fees: On Ethereum mainnet, a swap can cost $5-50 in normal conditions, $100+ during congestion. L2s and alt-L1s reduce this to cents or single-digit dollars, but it’s never zero.

MEV (Maximal Extractable Value): When you submit a DEX trade, searchers can see your pending transaction and sandwich it—buying before you, selling after, extracting value from your trade. Large orders on DEXs are targets.

Private RPCs and MEV protection services exist, but they add complexity. If you’re trading on-chain at size, MEV is a cost you cannot ignore.

The Compounding Tax

Costs don’t just subtract from each trade. They compound against you over time.

Frequency	Trades/Year	Cost per Trade	Annual Drag
Weekly	52	0.2%	20.8%
Daily	365	0.2%	146%
10x/day	3,650	0.2%	1,460%

A strategy that trades 10 times per day needs to generate 1,460% annual returns just to break even on costs at 0.2% per trade.

High-frequency strategies live or die by cost efficiency. If you’re paying retail fees and spreads, you’re not competing—you’re the product.

Net edge = Gross edge - Total costs. If this number is negative, you’re losing money with every trade, regardless of your win rate.

Measuring Your Real Costs

Most traders have never calculated their actual execution costs. Do this exercise:

Step 1: Export your trade history (API or CSV from your exchange).

Step 2: For each trade, compare your intended price to your actual fill price.

Step 3: Sum up: explicit fees + spread paid + slippage incurred.

Step 4: Track monthly and yearly.

The result usually surprises people. “I thought I was paying 0.1%” becomes “I’m actually paying 0.35%.”

This gap between perceived and actual costs is where many strategies quietly die.

Common Failure Modes

Only looking at fees. Fees are the tip of the iceberg. Spread and slippage can be 2-5x larger than the posted fee rate.
Backtesting with ideal fills. “Close price = execution price” is a fantasy. Real execution is always worse. Add realistic slippage to your backtests.
Dismissing “small” costs. 0.1% feels insignificant. Over 100 trades, it’s 20% of your capital. Over 1,000 trades, it’s 200%.
Forgetting funding rates. Holding a perpetual position for a few days can cost several percent in funding alone. This is real money leaving your account.
Ignoring MEV on DEXs. If your large DEX trades consistently fill worse than expected, you’re likely getting sandwiched. This isn’t bad luck—it’s systematic extraction.