- It is true that if you buy a stock at a given price and its value drops and then rises to its initial price, you have lost some money. This is because you pay transaction fees every time you buy or sell a stock. These fees are usually a percentage of the transaction amount, and they reduce your net profit. For example, if you buy a stock at $100 and pay $1 in fees, your actual cost is $101. If the stock drops to €90 then rises to €100, and you sell it paying €1 in fees, your net income is €99. You have therefore lost €2 in total, even if the share price has returned to its initial level.
- The same principle applies to cryptocurrencies, which are also subject to transaction fees. These fees vary depending on the exchange platform, type of cryptocurrency and network congestion. They can be fixed or proportional, and they are often higher than stock market fees. For example, if you buy a bitcoin for €30,000 and pay €100 in fees, your actual cost is €30,100. If bitcoin drops to €25,000 and then rises to €30,000, and you sell it paying €100 in fees, your net income is €29,900. You have therefore lost €200 in total, even if the price of bitcoin has returned to its initial level.
