Trading Costs: Understanding Price Impact and Trading Fees
It’s crucial for traders to understand the trading costs when opening or closing their positions. Beyond the base percentage, they must also factor in price impact (or slippage) to accurately gauge the true cost of their trades.
🤔 Trading Fees: How Do They Work?
Trading fees are a standard cost that traders incur when they open or close a position. These fees are typically expressed as a percentage of the trade size (e.g., 0.06% or 0.08%). On most platforms, these are set as a base fee for both opening and closing positions.
📖 Understanding Trading Costs
While Trading Fees are an important part of the trading cost equation, they only tell part of the story. On traditional orderbook-based PerpDEXs, the trade fee can appear low (e.g., 0.02%). However, the total cost of executing a trade also depends on liquidity and market conditions, which can introduce slippage or price impact into the trade execution.
⬅️ Understanding Price Impact ➡️
Price impact refers to the difference between the market price and the price at which your trade is executed due to liquidity constraints or order size. A larger trade in a less liquid market will typically experience higher price impact (or ‘slippage’), causing you to pay more (or receive less) than expected.
This “hidden” cost can often outweigh lower base fees.
For example, on an orderbook-based PerpDEX, a 0.02% trading fees might seem attractive, but if the price impact on your trade is 0.12%, your total cost rises significantly. On a platform like gTrade, with deep aggregated liquidity and efficient execution, lower price impact (e.g., 0.03%) can make the overall cost of trading more competitive, even if the trading fees are slightly higher.
🍏 gTrade recently lowered its trading fees to 0.06% (from 0.08%)
🍏 gTrade currently offers zero price impact on $BTC and $ETH trades
🍏 gTrade offers the best price impact conditions on altcoins from any PerpDEX
If you have any questions or feedback, feel free to reach out to the team.
Happy trading!
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