Orders, Fees and the Cost of Execution

Market limit and time instructions

Order instructions determine what a venue attempts to do, while costs determine how much of a result you keep. A limit order, stop order or fee discount does not remove execution uncertainty. This lesson explains the instructions and then calculates a complete fictional sale with the assumptions visible.

Education only. Crypto assets can lose substantial value or become worthless. No lesson requires buying an asset, depositing money or sharing real passwords, private keys or recovery words.

A market order requests execution against available liquidity under venue rules. It prioritises execution rather than a fixed price, and safeguards or size limits may still stop it. A limit buy sets a maximum price; a limit sell sets a minimum. A limit can remain unfilled or fill only partly. Cancellation applies to the remaining open amount, not to fills already completed.

Time-in-force instructions control how long an order remains eligible. Good-till-cancelled, immediate-or-cancel and fill-or-kill are common categories, but support and precise behaviour vary. A partially filled order creates both an executed holding and a remaining instruction. Review both before submitting another order. An application timeout does not prove that an order failed; check order history and status to avoid a duplicate.

Stops are triggers with an execution instruction

A stop-market order triggers a market instruction when the venue's specified reference meets the condition. A stop-limit triggers a limit instruction. The trigger reference may be last price, mark price or another measure under the product rules. Triggering is therefore only one stage, followed by actual execution conditions.

A stop-market can fill beyond the trigger during a gap or thin liquidity. A stop-limit can remain unfilled if price moves past the permitted limit. Neither guarantees the chosen loss amount. Record which price triggers the order, what follows, and what could prevent a fill. For classroom risk calculations, label a planned stop as an assumption rather than a certainty. Level 8 will include adverse execution and costs in a loss-budget example.

The rule must name the reference used for triggering and the instruction sent after triggering. If a derivative uses a mark price for liquidation and a last price for an order trigger, the two events can arrive in a different order than the learner expects.

A maker order adds liquidity that rests in the book; a taker order removes existing liquidity. The distinction concerns execution behaviour, not simply the order's name. A limit buy priced above an available ask can execute immediately and take liquidity. Some venues offer post-only instructions that reject or adjust an order that would immediately take, according to their rules.

An order can also have different fee treatments across its fills. Part may execute immediately while the rest rests, if the venue permits it. Use the actual fee schedule and fill report, including the asset in which fees are charged. Do not copy a fictional fee into a real calculation. Discount tokens or tiered schedules add further assumptions and may change the economic result.

Reconcile the fictional sale

No tax, funding or conversion is assumed. Each additional cash flow must be assessed separately.

The spread is the gap between quoted buying and selling prices. Price impact is the effect of your order interacting with liquidity. Slippage describes the difference between an expected reference and the actual execution, which may include market movement and impact. Trading fees are explicit venue charges. Network fees, withdrawal fees and currency conversion apply at other stages.

Avoid counting the same effect twice. If your actual average fill already includes walking through the book, adding another estimated impact charge may duplicate it. Similarly, use the actual conversion result or an explicit conversion assumption. A complete cost worksheet names each charge, its basis and whether it is already embedded in a quoted price. This makes results comparable and prevents a profitable-looking gross calculation from hiding a negative net outcome.

A budget airline in Sydney can advertise a A$49 fare, then add charges for bags, seats and card payments. The total, not the headline, is what you pay.

You have now met maker and taker fees, the spread and slippage. A provider's full fee page usually lists more:

Fees tell you what a provider charges. The next question is whether it actually holds what it owes.

Suppose ten fictional units were bought for GBP 100 each, with a GBP 5 entry fee. They later sell at an average GBP 104, producing GBP 1,040 gross proceeds. A 0.5 percent sale fee is GBP 5.20. A separate GBP 2 withdrawal charge leaves GBP 1,032.80. Against the GBP 1,005 total entry cost, the net gain is GBP 27.80.

The result assumes no other fee, funding cost, tax or currency change. Those omissions must be stated rather than hidden. Keep fill records and reconcile fee assets. PipStart's Risk Reward Calculator can illustrate planned distances, but it does not calculate every crypto cash flow or guarantee a stop fill. Use the manual worksheet for actual net proceeds and the tool for the clearly defined ratio.

Break-even is a cash-flow question. Include the original purchase value and entry costs on one side, and net sale proceeds after applicable costs on the other. A fee charged in a different token also needs a consistent valuation convention.

Use actual average fills when supplied. Do not add a second estimated slippage cost if the worse fill is already included. The same rule prevents misleading double counting when comparing provider quotes.

Everyday example

What to remember

Lesson completion check

References and further reading