Up 5% on a memecoin, and still down $7.75
· 6 min read
Buy $600 of a memecoin, watch it rise 5%, sell, and you are down $7.75. With a 1% platform fee, 2% slippage and a 50 cent network fee, each paid on the way in and again on the way out, $36.00 is gone before the price moves. The coin has to rise 6.4% just to get you back to zero.
The 1% fee, the 2% slippage and the 50 cent network fee are examples we chose. They are not any platform’s charges, and we name no platform and no coin. This is arithmetic on example figures, not financial advice.
How much do fees and slippage cost on one memecoin trade?
Three things come out of a trade, and each comes out twice, because a trade is not finished until you sell:
- The platform fee. A percentage of the trade, charged when you buy and again when you sell. Yours is on your platform’s fee page. We used 1%.
- Slippage. The gap between the price you saw and the price you got. We used 2% each way, and that one is a guess.
- The network fee. A flat amount per transaction, including any priority fee or tip. We used 50 cents.
On $600, if the price does not move at all, you get back $564.00. That is $36.00 gone, 6.0% of the trade.
Why did I lose money when the price went up?
Because the chart shows the price, and not what it cost to touch it. The costs come off first, whichever way the price goes. Here is the same $600 trade at each price move:
| Price move | You get back | Result |
|---|---|---|
| −10% | $507.50 | −$92.50 |
| 0% | $564.00 | −$36.00 |
| +5% | $592.25 | −$7.75 |
| +10% | $620.50 | +$20.50 |
| +25% | $705.25 | +$105.25 |
| +50% | $846.50 | +$246.50 |
| +100% | $1,129.00 | +$529.00 |
A 10% rise on $600 looks like $60. It pays $20.50. A 50% rise looks like $300 and pays $246.50. When the price falls, the costs are added to the loss.
How far does a coin have to rise to break even?
6.4% in this example, not 6.0%. You lost 6.0% of $600, but you are climbing back from $564.00, which is a smaller base. To get the figure for your own trade size, fee and slippage, use the trading fee and slippage calculator. It is free, there is no account, and nothing you type leaves your browser.
What is slippage, and where does it show up?
Nobody sends a bill for it. It is in the fill. You see one price, your own order moves it, and you are filled at a worse one: a coin quoted at $1.00 that fills at $1.02 is 2% slippage on a buy. On a thinly traded coin it can be much worse than that, and it is the one cost you cannot look up beforehand.
| Slippage each way | Cost of one round trip | Rise needed to break even |
|---|---|---|
| 2% | $36.00 | 6.4% |
| 5% | $68.95 | 13.0% |
| 10% | $119.86 | 24.9% |
Same $600 trade, 1% fee and 50 cent network fee throughout. Only the slippage changes.
Is a smaller trade safer?
It loses fewer dollars and a bigger share. The network fee is flat: $1.00 for the round trip whatever the size. On $600 that hardly registers. On $20 it is 5.0% of your money on its own, and the break-even rise goes up to 11.5%.
| Trade size | Cost of one round trip | Share of the trade | Rise needed to break even |
|---|---|---|---|
| $20 | $2.17 | 10.8% | 11.5% |
| $100 | $6.83 | 6.8% | 7.3% |
| $600 | $36.00 | 6.0% | 6.4% |
| $2,000 | $117.67 | 5.9% | 6.2% |
What trading in and out all day adds up to
One round trip costs $36.00. Do it 100 times in a day at the same size and the bill is $3,600, before a single trade has made anything. That is what the winning trades have to cover first, and the losing trades are on top of it.
When the costs bite hardest
- When the trade is small, because the network fee does not shrink with it.
- When the coin is thinly traded, because your own order moves the price further.
- When you trade often, because every round trip pays all three costs again.
What this does not tell you
- Your platform’s fee, or how any coin will fill. The fee and the slippage here are examples. Put your own in.
- Slippage on the way out. We assumed the same in both directions. In a thin market it can be worse when you sell, and it grows with the size of the trade.
- Everything left out. Tax, coins that charge their own transfer fee, transactions that fail, and the case where a coin cannot be sold at all.
Before a trade, the one number worth knowing is how far the price has to rise to get back to zero. The trading fee and slippage calculator gives it for your own figures. For what a funded-account challenge costs before a pass, there is the prop firm challenge cost calculator.
