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Glossary term

Trading Costs

All costs paid to enter and exit positions.

Trading costs include commissions, bid-ask spreads, market impact, slippage, borrow fees, taxes, and operational frictions.

Example: A 6 bps daily edge is not useful if the round-trip trading cost is 20 bps.

Where this appears

Short-term reversal: real but hard to tradeThe retail liquidity edge over hedge funds