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Spreads, Best Bid, Best Ask, Maker & Taker Fees in Crypto Trading (Complete Beginner’s Guide)

If you’re new to crypto trading, you’ve probably come across terms like spread, best bid, best ask, maker, and taker. These concepts directly affect the price you trade at and the fees you pay on every order. Understanding them can help you reduce trading costs, improve execution quality, and become a more efficient trader. In this guide, we’ll explain each concept with simple examples.

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What is the Order Book?

Every cryptocurrency exchange maintains an order book, which is simply a live list of all pending buy and sell orders placed by traders. The order book has two sides:
  • Buy Orders (Bids) – People willing to buy a cryptocurrency.
  • Sell Orders (Asks) – People willing to sell a cryptocurrency.
Whenever a buyer and seller agree on the same price, a trade is executed.

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What is the Best Bid?

The Best Bid is the highest price that someone is currently willing to pay for a cryptocurrency.

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Example

Suppose the order book looks like this: The Best Bid is: $99,950 This is currently the highest buying offer in the market.

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What is the Best Ask?

The Best Ask is the lowest price at which someone is currently willing to sell. Example: The Best Ask is: $100,000 This is the cheapest available selling price.

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What is the Spread?

The Spread is the difference between the Best Ask and the Best Bid.

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Formula

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Example

Best Bid = $99,950 Best Ask = $100,000 Spread:
So the spread is $50.

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Why Does the Spread Exist?

The spread exists because buyers want to purchase at lower prices while sellers want to sell at higher prices. The spread becomes:
  • Smaller in highly liquid markets
  • Larger in low-volume markets
  • Wider during high volatility
  • Narrow during stable market conditions
Popular pairs like BTCUSDT usually have extremely small spreads, while low-volume altcoins may have much wider spreads.

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What is a Market Order?

A Market Order executes immediately at the best available price in the order book. Suppose: Best Bid = $99,950 Best Ask = $100,000 If you place a Market Buy order: You instantly buy at: $100,000 If you place a Market Sell order: You instantly sell at: $99,950 Market orders prioritize speed over price.

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What is a Limit Order?

A Limit Order lets you choose the exact price at which you want to buy or sell. Example: Current BTC price: $100,000 Instead of buying immediately, you place: Buy Limit Order = $99,500 Your order waits in the order book until someone agrees to sell at that price. Limit orders prioritize price over speed.

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Who is a Maker?

A Maker is a trader who adds liquidity to the order book. Instead of executing immediately, the trader places a limit order that waits for someone else to match it.

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Example

BTC trades at: $100,000 You place: Buy Limit Order at $99,800 Your order sits in the order book. You have created liquidity. You are a Maker.

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Who is a Taker?

A Taker is someone who removes liquidity from the order book. Instead of waiting, the trader executes against existing orders. Example: Current Best Ask: $100,000 You submit a Market Buy. Your order instantly consumes the seller’s order. You removed liquidity. You are the Taker.

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Why Are Maker Fees Lower Than Taker Fees?

Most cryptocurrency exchanges encourage traders to provide liquidity. When traders place limit orders:
  • The order book becomes deeper.
  • Price discovery improves.
  • Large orders experience less slippage.
  • The market becomes more efficient.
Because makers help improve market quality, exchanges reward them with lower trading fees. Takers consume liquidity immediately, increasing matching engine workload and potentially causing price movement, so exchanges generally charge higher fees for taker orders.

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Example of Maker and Taker Fees

Imagine an exchange charges: You buy BTC worth $10,000.

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As a Maker

Fee:

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As a Taker

Fee:
Over hundreds or thousands of trades, this difference can significantly impact your profitability.

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What is Liquidity?

Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. High liquidity means:
  • Small spreads
  • Faster execution
  • Lower slippage
  • Better pricing
Low liquidity often results in:
  • Wide spreads
  • Higher slippage
  • Slower order execution

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What is Slippage?

Slippage occurs when your order executes at a different price than expected because there isn’t enough liquidity at the desired price. Example: You place a Market Buy for 10 BTC. Only 2 BTC are available at: $100,000 The remaining quantity executes at:
  • $100,020
  • $100,040
  • $100,080
Your average purchase price becomes higher than expected. This difference is known as slippage.

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How Can Traders Reduce Trading Costs?

Professional traders often reduce costs by following these practices:
  • Use limit orders whenever immediate execution is not essential.
  • Trade highly liquid pairs with tighter spreads.
  • Avoid trading during major news events when spreads can widen.
  • Compare fee structures across exchanges.
  • Consider the total cost of trading, including spreads, fees, and potential slippage.

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Example: Complete Trading Flow

Suppose the order book is: Best Bid: $49,995 Best Ask: $50,000 Spread: $5

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Scenario 1 – Market Buy

You immediately buy at: $50,000 You are the Taker. You pay the taker fee.

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Scenario 2 – Limit Buy

You place a Buy Limit at: $49,995 Your order waits in the order book. When a seller matches your price:
  • You buy at your chosen price.
  • You are the Maker.
  • You pay the lower maker fee.

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Frequently Asked Questions (FAQs)

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Is a Market Order always a Taker order?

In most cases, yes. Market orders execute immediately by matching existing orders in the order book, making you a taker.

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Can a Limit Order become a Taker order?

Yes. If your limit order is placed at a price that immediately matches an existing order, it executes instantly and is treated as a taker order on many exchanges.

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Why do exchanges reward makers?

Makers improve market liquidity, reduce spreads, and create a healthier trading environment. Lower fees encourage traders to place more resting limit orders.

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Is a smaller spread always better?

Generally, yes. Smaller spreads mean lower implicit trading costs and more efficient price execution.

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Should beginners always use limit orders?

Limit orders provide better price control but may not execute immediately. Beginners should understand the trade-off between execution speed and price certainty before choosing between market and limit orders.

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Conclusion

Every crypto trade involves more than just the market price. The best bid, best ask, spread, and whether you’re acting as a maker or taker all influence your final trading cost. By understanding these concepts and using limit orders strategically when appropriate, traders can often reduce fees, minimize slippage, and improve long-term trading performance. Whether you’re trading manually or using automated strategies, a solid understanding of market structure is an essential step toward becoming a more efficient crypto trader.