Order types and trading fees

The way you place an order decides the price you get. The fees decide how much of your money reaches the asset. This lesson covers both.

Market orders

A market order buys or sells straight away at the best price available. It is the simplest order and the default in most apps.

The catch is that the price is not guaranteed. In a fast market, or with a thinly traded coin, your order can fill at a worse price than the one you saw. The difference is called slippage.

Limit orders

A limit order buys or sells at a price you set, or better. A buy limit at $90,000 will never pay more than $90,000.

The catch is the reverse: a limit order is not guaranteed to fill. If the market never reaches your price, nothing happens.

Stop orders

A stop order waits until the price reaches a level you choose, the stop price. Then it becomes a market order. People use stops to sell if a price falls past a set point.

The stop price is a trigger, not a guaranteed price. In a sharp fall, the sale can happen well below it. A stop-limit order adds a price limit, with the risk that it never fills.

Order	Fills	Price
Market	Immediately	Not guaranteed
Limit	Only at your price or better	Guaranteed if it fills
Stop	After the stop price is reached	Not guaranteed

Most long-term buyers need only the first two.

The fees you pay

Trading fee. A percentage of each trade. Many exchanges charge less if your order adds to the order book (a maker) than if it takes an existing offer (a taker). Limit orders that wait are usually maker orders.

Spread. The gap between the buying and selling price. Simple "instant buy" screens often show no fee and build their margin into a wider spread.

Deposit and withdrawal fees. Card deposits usually cost more than bank transfers. Withdrawing crypto costs a fee that covers the network's charge and sometimes more.

Find the real cost

Before a purchase, compare the price you are offered with the market price on an independent site. Then add the stated fee.

Suppose bitcoin trades at $100,000 and an app offers to sell at $101,000 with "no fee". The spread is costing you 1%.

Small purchases are hit hardest by fixed fees. A $1 fee on a $10 purchase is 10%. The same fee on $200 is 0.5%. If you buy regularly, as in Lesson 16, this matters.