Which implicit costs should cryptocurrency traders consider when making investment decisions?

1 answers

• Dec 16, 2021 · 3 years ago
  As a cryptocurrency trader, it is important to be aware of the implicit costs that can affect your investment decisions. These costs may not be directly visible but can eat into your profits over time. Some implicit costs to consider include bid-ask spreads, slippage, and the cost of liquidity. Bid-ask spreads are the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. Slippage refers to the difference between the expected price of a trade and the actual executed price. It can occur when there is high volatility or low liquidity in the market. The cost of liquidity refers to the expenses associated with buying or selling large amounts of cryptocurrency without significantly impacting the market price. By factoring in these implicit costs, you can make more informed investment decisions and improve your overall profitability.
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