How to Calculate Real Crypto Arbitrage Profits (Including Hidden Fees)
Most beginner arbitrage traders make the same mistake: they look at the price difference between two exchanges and assume that is their profit. In reality, hidden fees can turn a seemingly profitable trade into a loss. Here is how to calculate your real net profit.
Step 1: Identify the Gross Spread
The gross spread is the raw price difference. For example:
- BTC on Binance: $67,450 (ask price — what you pay to buy)
- BTC on Kraken: $67,620 (bid price — what you receive when selling)
- Gross spread: $170 or approximately 0.25%
This looks great on paper. But we are not done.
Step 2: Subtract Trading Fees
Every exchange charges a fee when you execute a trade. These are typically split into:
- Maker fees: When you place a limit order (cheaper, usually 0.01%–0.1%)
- Taker fees: When you place a market order (more expensive, usually 0.05%–0.1%)
For arbitrage, you usually need market orders for speed, so assume taker fees on both sides:
- Binance taker fee: 0.1% of $67,450 = $67.45
- Kraken taker fee: 0.26% of $67,620 = $175.81
- Total trading fees: $243.26
Our $170 gross spread is now -$73.26 — a loss! This is why fee awareness is critical.
Step 3: Factor in Withdrawal Fees
To move BTC from Binance to Kraken, you pay a withdrawal fee. On the Bitcoin network, this is typically 0.0001–0.0005 BTC (approximately $6.75–$33.75).
Even using the cheapest option: $6.75 additional cost.
Step 4: Consider Slippage
If you are trading larger amounts, the order book might not have enough liquidity at the quoted price. A $50,000 market buy could push the price up by 0.02–0.05%, adding another $10–$25 in hidden cost.
The Net-Cost Formula
Net Profit = Gross Spread − Buy Fee − Sell Fee − Withdrawal Fee − Slippage
For our example:
$170 − $67.45 − $175.81 − $6.75 − $10 = -$90.01
This trade would be a loss. Our Net-Cost Arbitrage Calculator does this math for you in real-time across all major exchanges.
How to Actually Make It Profitable
- Use exchanges with lower fees: Compare taker fees on our Exchange Comparison page
- Hold native tokens: BNB on Binance gives you a 25% fee discount
- Trade larger volumes: Fees are percentage-based, but withdrawal fees are flat — bigger trades dilute the fixed cost
- Pick altcoins with wider spreads: SOL, XRP, and DOGE often have 0.3–0.5% spreads vs BTC's 0.1–0.2%
- Use cheap withdrawal networks: TRC-20 and Solana cost under $1 vs Ethereum's $5+
Key Takeaway
Never evaluate an arbitrage opportunity by the gross spread alone. Always calculate the full net cost. Use our live arbitrage scanner to see which pairs are genuinely profitable after all fees are deducted.