[Verse 1]
When you buy or sell a stock today
There's a price that you will have to pay
Not just the share price that you see
Hidden costs add up quite sneakily
Some are clear and some are hard to find
But they'll take a bite out of your mind
[Chorus]
Trading costs come in two types you see
Explicit and implicit, both subtract from me
Commissions, spreads, and market impact too
These transaction costs will follow you
E-X-P-L-I-C-I-T costs are clear to see
I-M-P-L-I-C-I-T costs hide from you and me
[Verse 2]
Explicit costs are easy to detect
Your broker's bill shows what to expect
Commissions charged for every single trade
Management fees that must be paid
Stamp duties, taxes on the side
These visible costs you cannot hide
[Chorus]
Trading costs come in two types you see
Explicit and implicit, both subtract from me
Commissions, spreads, and market impact too
These transaction costs will follow you
E-X-P-L-I-C-I-T costs are clear to see
I-M-P-L-I-C-I-T costs hide from you and me
[Verse 3]
Implicit costs are harder to perceive
They're sneaky tricks up trading's sleeve
The bid-ask spread between the prices
Market impact when volume rises
When you trade, the price will move
These hidden costs your returns prove
[Bridge]
Bid price low, ask price high
Spread's the gap between them, my oh my
When you buy big, prices climb
When you sell big, they decline
Market impact's everywhere
Total costs beyond compare
[Chorus]
Trading costs come in two types you see
Explicit and implicit, both subtract from me
Commissions, spreads, and market impact too
These transaction costs will follow you
E-X-P-L-I-C-I-T costs are clear to see
I-M-P-L-I-C-I-T costs hide from you and me
[Outro]
Before you trade, remember well
Every transaction has costs to tell
Calculate them all to see
Your true investment reality