There are two most common issues for those trading in the crypto markets: the bid-ask spread and slippage. At first glance, they may seem technical, but these two concepts can have a significant impact on your wallet.

The bid-ask spread is actually simple. It’s the difference between the lowest selling price when you want to buy an asset and the highest buying price when you want to sell. In traditional exchanges, market makers control this spread, while in crypto markets, the distance between limit orders from buyers and sellers determines it. For highly liquid assets, this spread is very small, but during periods of high volatility, it can widen considerably.

So, what is slippage? It’s the situation where traders have to execute a trade at a different price than they expected. For example, you plan to buy Bitcoin at $45,000, but your order executes at $45,500. That difference is slippage. There’s a good side too; sometimes you can get a better price than expected, but generally, we encounter it negatively.

There are a few ways to minimize these risks. Using limit orders is the safest method. Yes, the transaction may take a bit longer to complete, but you avoid slippage risk. If you want to buy large amounts, split the purchase into smaller parts. Follow the order book and avoid placing large orders based on real-time volume. Be especially careful with low-liquidity altcoins, as even a single trade can trigger slippage.

Another important detail: if you’re using decentralized exchanges, pay close attention to transaction fees. Gas fees on some networks can be so high that you might face losses much greater than the cost of slippage. When choosing which exchange to trade on, research the fee structure carefully.

In conclusion, the bid-ask spread and slippage in crypto markets can’t be completely eliminated, but you can significantly reduce their risks by making smart moves. Understanding volatility, using the right order types, and controlling trade size are the most effective ways to protect your wallet in the long run.