Slippage
Slippage is the difference between the price you expect and the price you actually get. This can happen when you buy or sell crypto.
What is slippage?
The price can change between the time you place an order and when it’s executed. As a result, you may sometimes pay more than expected when buying, or receive less when selling.
Slippage happens mostly when prices move quickly or there are few buyers and sellers. A market order, which is executed immediately at the best available price, is more susceptible to it.
Slippage can also be positive. In that case, the price moves in your favor, and you get a better price than expected.
An example of slippage
You want to buy one Ethereum for €2,000 and place a market order. Just afterward, other people buy the Ethereum available at that price.
Your order is then executed at €2,020. The slippage is €20: the difference between the expected price and the final price.
Why does slippage matter in crypto?
The crypto market is always open, and prices can change quickly. Smaller tokens sometimes have less trading activity, so the price can shift more when you place an order.
That’s why slippage can matter in news about sharp price movements, low liquidity, or large trades. It doesn’t automatically mean a platform is unreliable, but it does mean the final price may differ from what you expected.
A limit order is only executed at a set price or better. This can help you avoid negative slippage, but the order may not be executed. On some decentralized exchanges, you can also set a maximum price difference. If the difference is greater than that, the transaction won’t go through.
