I've noticed that many beginners in crypto trading overlook an important detail that quietly eats into their profits – the spread between the buy and sell prices. Let's understand why this matters.

When you look at the order book, there is always some gap between the best bid and the best ask price. For example, if the highest bid is $22,346 and the lowest ask is $22,347, the difference between them is one dollar. This gap is called the spread.

Essentially, it’s the difference between the maximum price a buyer is willing to pay and the minimum price a seller is willing to accept for the asset. On large exchanges with high liquidity, the spread is usually narrow because many participants are competing with each other. But on less popular pairs or during volatility, the spread can widen noticeably.

Why is this important? Because every time you enter a position, you buy at a higher price (ask), and when you exit, you sell at a lower price (bid). Even if the market doesn’t move, you’re already at a loss equal to the size of the spread. Imagine trading token ABC with a fair value of $0.35 and a spread of $0.02. You buy at $0.36, and the best available sell price is $0.34. To break even, the price must rise by 5%. And that’s just on one trade.

If you trade actively, these small losses from the bid-ask spread accumulate. For example, with Ethereum: if the best bid is $1570 and the ask is $1570.50, the spread is 50 cents. It seems minor, but after a hundred trades, it adds up to a significant amount. Markets with higher volume have narrower spreads, while illiquid markets have wider ones. This is simply a consequence of competition: the more traders there are, the closer they set their prices to each other. That’s why experienced traders always check the spread before entering a trade – it directly affects their profitability.