When traders talk about the cost of trading, they usually mean fees. But two other costs — the spread and slippage — are just as real and never show up on a fee schedule. On thin markets they can dwarf the official fees. This guide explains both and how to keep them under control.
The spread
The spread is the gap between the best price to buy (the ask) and the best price to sell (the bid) in the order book. If the best bid is 61¢ and the best ask is 63¢, the spread is 2¢. It is the price of immediacy: buy now and sell immediately and you lose that 2¢ instantly. A liquid market has a spread of a cent or less; a thin one can be several cents wide. The spread is effectively a cost you pay every time you cross it with a market order.
Slippage
Slippage is what happens when your order is too big to fill at a single price. Suppose only 50 contracts are offered at 63¢, then the next 50 at 64¢, and you want 100. The first half fills at 63¢ and the second at 64¢, so your average price is 63.5¢ — worse than the 63¢ you saw at the top of the book. That extra half-cent is slippage, and on shallow markets a large order can walk the price up several cents. The thinner the book, the worse it bites.
Why they matter
Together, the spread and slippage are the true cost of getting in and out, and they compound just like fees. A 2¢ spread on a 60¢ contract is more than a 3% round-trip cost before you have paid a single fee — enough to erase a genuine edge. This is exactly why accuracy and liquidity go hand in hand, and why serious traders care so much about which markets are deep.
How to minimise them
- Use limit orders. Posting a limit order at or inside the spread lets you avoid crossing it — you may even earn the spread rather than pay it.
- Trade liquid markets. Deep books have tight spreads and absorb size with little slippage.
- Size sensibly. Break a large order into pieces, or simply trade smaller, to avoid walking up the book.
- Check depth first. A glance at the order book tells you how much you can trade before slippage sets in.
To see how these costs combine with platform fees on a given trade, use the fee calculator.
Frequently asked questions
What is the spread in a prediction market?
It is the gap between the best buy price (ask) and best sell price (bid). It represents the cost of immediacy: trading in and straight back out loses you the spread. Liquid markets have tight spreads; thin markets have wide ones.
What causes slippage?
Slippage happens when your order is larger than the size available at the best price, so part of it fills at worse prices further down the book. The result is an average fill price worse than the top-of-book quote. Shallow markets cause more slippage.
How do I avoid these costs?
Use limit orders rather than market orders, trade liquid markets with deep books and tight spreads, keep your order size sensible relative to the available depth, and check the order book before trading.