Slippage

Slippage refers to the difference between the expected price of a trade and the actual price at which it’s executed, often due to market volatility or low liquidity.

How Slippage Happens

In fast-moving or illiquid markets, the price of a crypto asset can change between the moment a trade is placed and when it’s filled. This results in the trader receiving a slightly worse (or sometimes better) price than anticipated. Slippage is common during large trades, high volatility, or when using automated market makers (AMMs) like those on decentralized exchanges.

Why Slippage Matters

Understanding slippage is key for managing trading risk, especially in DeFi or during volatile market conditions. Some platforms allow users to set a slippage tolerance, automatically cancelling a trade if the price moves too far. Being aware of slippage helps traders make more informed decisions and avoid unexpected losses.