What is Slippage in Crypto?

Slippage is a term that is used to refer to the difference between the expected price and the actual price of a trade. Slippage typically occurs during periods of high volatility when executing market orders. A lack of liquidity in a market or a highly volatile market can contribute to the likelihood of slippage occurring. This article will provide a breakdown of how slippage works, the difference between positive and negative slippage, and strategies for how to minimise the impact of slippage.

What is slippage?

Slippage is the difference between the expected price of a trade and the price at which a trade is executed. Slippage can occur in any market condition but occurs more often when large orders are executed in markets with insufficient volume, during periods of high volatility, or when a trader uses market orders.

Slippage can be defined as either negative or positive. Negative slippage refers to price differences that occur when an order is executed at a worse price than the trade intended (i.e higher than expected). On the other hand, positive slippage refers to a price difference that occurs when the executed price of an order is favourable to a trader (i.e lower than expected).

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