Fees, Slippage, and Execution Quality

In crypto markets, an apparent spread can vanish once you account for costs. The primary phrase, fees and slippage, captures the two most common reasons an arbitrage opportunity fails to convert into profit. Fees are explicit costs charged by venues and networks; slippage is the implicit cost of moving the market while you execute.

Start with fee mapping. Trading fees vary by exchange, by tier, and sometimes by pair. Deposits may be free, but withdrawals can include fixed charges that dominate smaller trades. Network fees are volatile and can spike during congestion, so an “instant” transfer assumption can be dangerous. For realistic modeling, measure effective fees over time, not only the published schedule.

Slippage comes from liquidity depth and order‑book dynamics. If you hit the book with a market order, you may consume multiple price levels. Even with limit orders, you can suffer adverse selection when price moves away. Measure expected slippage by simulating fills at the target size and comparing to mid‑price. Pay attention to spread widening during volatility or low‑liquidity hours.

Secondary phrases like execution quality and latency matter because the best spreads are short‑lived. A strategy that reacts quickly but ignores costs can lose money; a strategy that models costs but is too slow will miss fills. The correct approach is to validate opportunities net of all costs, then execute with risk gates.

For plan options and tooling, review Pricing. For risk constraints, see the Risk Gates guide.