The chart says profit. Costs tell the rest.
Your entry and exit prices are only part of a trade. Even a good-looking gross result can shrink when commissions, spread, slippage and, on some derivatives, funding are included.
Updated 14 Nov 2026 · Original educational material · Hypothetical examples, not live market data
1. Three expenses that are easy to confuse.
Trading fees are amounts charged by an exchange or broker for processing a trade. Spread is the difference between the current best buying and selling quotes. Slippage is the difference between the expected execution price and the price actually obtained.
For a market buy, you typically cross the spread and take available sell-side liquidity. If the order is large relative to the order book, fills can occur at multiple prices. A limit order specifies a price bound, but it is not automatically maker: a marketable limit order can execute immediately and take liquidity.
2. Maker and taker: what really changes?
A maker order rests on the book and adds available liquidity before somebody trades against it. A taker order executes against liquidity already available. Many venues apply different fee tiers for these two outcomes, but the exact percentage depends on your exchange, market, account tier and discounts.
A passive limit order may not fill at all. A market order generally prioritizes execution, not a guaranteed price. Neither route is automatically superior: a lower fee can be offset by missed fills, adverse selection or an unfavorable fill price.
How $20 of gross profit becomes $14.98.
Suppose you plan to buy 10 units at $100 and later sell at $102. The no-cost result would be +$20. Now assume execution is $0.15 worse per unit on entry and exit, and each side charges 0.10% of executed notional.
| Item | Calculation | Value |
|---|---|---|
| Planned entry / exit | $100 / $102 | $20.00 gross |
| Actual entry fill | $100 + $0.15 | $100.15 |
| Actual exit fill | $102 − $0.15 | $101.85 |
| Gross after adverse fills | 10 × ($101.85 − $100.15) | $17.00 |
| Entry fee | 0.10% × 10 × $100.15 | $1.0015 |
| Exit fee | 0.10% × 10 × $101.85 | $1.0185 |
| Net P&L | $17.00 − $2.02 | +$14.98 |
Compared with the original $20 idea, $5.02 disappeared: $3 from less favorable fills and $2.02 from commissions. The illustration does not claim that 0.1% is an actual exchange fee or that slippage is always $0.15.
Swipe sideways to see the full chart →
3. Spread is a cost even without a separately listed fee.
Imagine a quote of $99.90 bid / $100.10 ask. A trader buying at the ask and immediately selling at the bid, with no price change and no commissions, loses $0.20 per unit. That is the quoted spread paid by crossing both sides of the book.
Do not automatically add the quoted spread a second time if your execution model already uses actual bid/ask fills: doing so would double-count it. Likewise, distinguish slippage measured from a midpoint quote from slippage measured against the quote you actually expected to fill.
4. Funding: a separate mechanism for perpetual contracts.
A perpetual futures contract usually has no fixed expiry. To help the contract trade near the underlying market, many venues use periodic funding transfers between long and short positions. Under a common convention, positive funding means longs pay shorts, while negative funding means shorts pay longs. Exact implementation differs by venue.
As a simple illustration, a $10,000 notional position facing a funding rate of +0.01% would involve a $1 payment by the long at one funding event, if that rate and notional apply at settlement. This is not an annual rate or a promise of recurring $1 charges. Position notional, the funding rate and the number/timing of settlements can change.
Spot holdings do not normally have perpetual funding payments simply because they are held. Margin borrowing, however, may carry interest, and particular products can have separate costs. Inverse coin-margined instruments may settle funding in coin rather than a stablecoin.
Three mistakes that break a backtest.
“A limit order is always maker.”
Immediately executable limits can take liquidity. An unfilled passive limit also creates opportunity cost.
“My chart shows the fill.”
Candle closes, midpoints, bid/ask quotes and actual order fills are not interchangeable prices.
“Funding is fixed.”
Perpetual funding rates and settlement terms can change. A backtest should use the correct historical methodology rather than a guessed annual yield.
Frequently asked questions.
Is a market order always more expensive than a limit order?
Not necessarily in overall outcome. Market orders often pay taker fees and cross spread, but a resting limit may fail to execute or fill only in less favorable circumstances.
Can fees make a positive-expectancy strategy unprofitable?
Yes. Small per-trade net costs can be decisive when the gross arithmetic edge is modest. The magnitude depends on how costs relate to the amount risked.
Is spread the same as slippage?
No. Spread is the bid/ask difference at a moment. Slippage compares an expected price with actual execution; poor fills can occur even after accounting for the spread.
Do all futures charge funding?
No. Periodic funding is typical of perpetual contracts, not identical to traditional dated futures. Dated contracts can have their own basis and settlement mechanics.
Do negative funding rates mean my trade must be profitable?
No. Funding is only one cash flow and market-price losses may be far larger. Funding sign and who pays also follow the specific contract rules.