Explanation
The spread is a hidden cost: you buy at the top and sell at the bottom. On major coins it is hundredths of a percent; on small coins it can run into whole percentages.
Why there is a gap
The spread is the gap between the highest price someone will pay and the lowest at which someone will sell. That gap compensates whoever provides liquidity: the market maker who always quotes a price bears risk in the time between buying and selling on, and charges a margin for it.
What it costs you
On bitcoin at a large exchange the spread is often below 0.05 percent; on a small altcoin it can reach several percent. Buy and sell back to back and you pay that spread twice, on top of commission. For active traders this is often the biggest hidden cost — larger than the visible fees.
Key takeaways
- The spread is a cost, even when not shown separately.
- Small coins have structurally wider spreads.
- It widens at low volume and overnight.
Frequently asked questions
+How do I reduce the spread I pay?
Trade during the busiest hours, use limit orders instead of market orders and pick markets with deep volume in the pair you trade.