The latest price is 100. Why is the average execution price for 100 coins 100.65?
The latest price records the most recent trade. When your order reaches the matching engine, the amount available at each level on the other side of the order book also matters. Buyers look at the sell side; sellers look at the buy side. Even a narrow spread doesn’t mean your entire order can be filled at the best price level.
Let’s work through a purely hypothetical spot order book: the latest price is 100 USDT, and the sell side has 20 coins at 100, 30 coins at 100.5, and 50 coins at 101. Assuming sufficient funds, compliance with trading rules, and no changes to these orders before matching, a market buy order for 100 coins would cost 10,065 USDT, for an average price of 100.65—0.65% above the reference price of 100, before fees. When your order exceeds the quantity at the first level, the remainder is matched level by level.
If you instead place a limit buy order for the same 100 coins at 100.5, this unchanged order book would allow up to 50 coins to be filled initially, at an average price of 100.3. Whether the other 50 coins can be filled depends on subsequent sell orders and the order’s time-in-force. Limiting the maximum execution price may also mean you don’t buy the full amount. This comparison is about quantity and price limits; neither order type inherently guarantees a better outcome.
Binance Spot also offers a slippage tolerance tool. According to the official explanation (https://www.binance.com/en/support/faq/detail/c6c69301d6f6448487ce91a36074f305), when enabled, a market order is executed as a limit order with an immediate-or-cancel instruction. If there isn’t enough depth within the tolerance range, the unfilled portion is canceled. This can be used according to the corresponding rules only when the option is available in the actual interface. Price constraints and complete execution of the requested quantity are not the same thing.
For a planned trade, first compare the quantity you need with the available order-book depth, then check the actual average execution price, fees, and unfilled quantity. An order-book snapshot does not guarantee the price of a later execution. Orders may be canceled or filled by someone else first, and the estimate above becomes invalid if market conditions change. Splitting an order into smaller parts doesn’t guarantee a lower price either; while you wait, the price may move against you.
This example explains execution costs. It is not a record of an actual trade and does not guarantee a profit.
#TradingCosts #TradeReview
The latest price records the most recent trade. When your order reaches the matching engine, the amount available at each level on the other side of the order book also matters. Buyers look at the sell side; sellers look at the buy side. Even a narrow spread doesn’t mean your entire order can be filled at the best price level.
Let’s work through a purely hypothetical spot order book: the latest price is 100 USDT, and the sell side has 20 coins at 100, 30 coins at 100.5, and 50 coins at 101. Assuming sufficient funds, compliance with trading rules, and no changes to these orders before matching, a market buy order for 100 coins would cost 10,065 USDT, for an average price of 100.65—0.65% above the reference price of 100, before fees. When your order exceeds the quantity at the first level, the remainder is matched level by level.
If you instead place a limit buy order for the same 100 coins at 100.5, this unchanged order book would allow up to 50 coins to be filled initially, at an average price of 100.3. Whether the other 50 coins can be filled depends on subsequent sell orders and the order’s time-in-force. Limiting the maximum execution price may also mean you don’t buy the full amount. This comparison is about quantity and price limits; neither order type inherently guarantees a better outcome.
Binance Spot also offers a slippage tolerance tool. According to the official explanation (https://www.binance.com/en/support/faq/detail/c6c69301d6f6448487ce91a36074f305), when enabled, a market order is executed as a limit order with an immediate-or-cancel instruction. If there isn’t enough depth within the tolerance range, the unfilled portion is canceled. This can be used according to the corresponding rules only when the option is available in the actual interface. Price constraints and complete execution of the requested quantity are not the same thing.
For a planned trade, first compare the quantity you need with the available order-book depth, then check the actual average execution price, fees, and unfilled quantity. An order-book snapshot does not guarantee the price of a later execution. Orders may be canceled or filled by someone else first, and the estimate above becomes invalid if market conditions change. Splitting an order into smaller parts doesn’t guarantee a lower price either; while you wait, the price may move against you.
This example explains execution costs. It is not a record of an actual trade and does not guarantee a profit.
#TradingCosts #TradeReview