Why can the spread be larger on a large transaction?

The spread can be larger on a large transaction because the best available price only covers a limited quantity. The market holds a queue of buy and sell offers at different prices, known as order book depth. A small buy order can usually be filled entirely at the lowest asking price, but a large one may use up every unit offered at that price and then be filled from sellers asking progressively more. The average price you pay ends up higher than the best quoted price, which works like a wider spread; the same happens in reverse when you sell a large amount, with part of the order filled at lower bids. This is supply and demand at work: to buy a large amount at once, there have to be sellers ready to supply that amount. How much order size matters depends on the asset — deeply traded assets absorb large orders with little effect, while thinly traded ones feel it much sooner. On Pluang, crypto uses a floating spread that also depends on transaction volume.

Worked example (a simplified order book)

Sellers are offering Bitcoin at these prices:

• Buying 0.2 BTC: filled entirely at US$30,000, so your average price is US$30,000
• Buying 2 BTC: 0.5 at US$30,000, 0.5 at US$30,020 and 1 at US$30,050. Total US$60,060 ÷ 2 = average price US$30,030

The larger order paid US$30 more per BTC on average, because it had to reach further into the order book.

Things that can help with large orders

• Splitting the order. Several smaller orders placed over time give the order book a chance to refill between them, although the price may move in the meantime.
• Using a limit order where available. A limit order caps the price you pay, or sets the minimum you accept when selling, but it may fill only in part or not at all.
• Trading when the market is active. Busier periods usually have more offers close to the current price, so a large order moves the price less.

Related questions:

Q: How large does an order have to be before the spread grows?
There is no fixed threshold, because it depends on how much is on offer near the current price for that asset at that moment. A deeply traded asset during a busy period can absorb a large order with almost no effect, while a thinly traded asset can feel even a moderate order. The practical check is to compare the price shown before you confirm with the price for a smaller amount: if the gap is noticeable, the order is large relative to current depth.

Q: Does this also happen when I sell a large amount?
Yes, in reverse. A large sell order may use up all the buyers at the best bid and then be filled by buyers bidding progressively less, so your average selling price comes in below the best quoted bid. The effect is the same as on the buying side: the larger the order relative to what is on offer, the further it reaches into the order book and the wider the effective spread you pay.

Q: Can a limit order stop this from happening?
A limit order stops you from paying more than your chosen price when buying, or receiving less than it when selling, so it protects you from reaching too far into the order book. The trade-off is that it only fills where there is enough volume at your price or better, so a large limit order may fill only in part. For crypto advanced orders on Pluang, the unfilled part of a partially filled order expires at 24:00 WIB on the day of the partial fill.

Q: Is this the same thing as slippage?
They are closely related. The size effect described here is one cause of slippage: your average execution price ends up different from the best price quoted, because the order is larger than what is available at that price. Slippage also covers price movement during execution, which can happen to an order of any size in a fast-moving market. Both are reasons the price you trade at can differ from the price you saw.