Spreads and trading fees: what's the difference?

A fee is charged on top of the trade. A spread is built into the price itself. You pay both, but only one of them is usually labelled.

What the spread is

An exchange's order book has buyers' bids and sellers' asks. If the best ask is A$100,100 and the best bid is A$99,900, the spread is A$200, or 0.2% of the A$100,000 mid price. You buy at the ask and sell at the bid.

Worked example: no fee, higher price

An instant-buy service with no fee but a price 1.5% above the market (A$101,500) gives 0.01970443 BTC for A$2,000. An exchange with a 0.5% fee and a A$100,100 ask gives 0.01988062 BTC. "No fee" was the more expensive option.

Buying and selling straight away

A round trip crosses the spread once and pays the trading fee twice. Buy A$2,000 of BTC at that exchange and sell it back a moment later, and you'd get about A$1,976.14: A$23.86 gone, even though the market didn't move. The comparison shows this "buy + immediate sell" figure for each exchange.

See each exchange's cost against the market mid price

Related guides

Further reading: ASIC Moneysmart. Examples use round illustrative prices, not live quotes; the tools use live order books. General information, not financial, investment or tax advice.