Slippage

What Is Slippage?

Slippage happens when the actual price at which a trade is executed differs from the expected price. This can occur during times of high volatility or when there isn't enough liquidity to match the trade size at the desired price. The platform could also be slow.

How It Works

• Order Placement: You place an order to buy or sell an asset at a specific price.
• Price Movement: The market price shifts before the trade is executed.
• Trade Execution: Your order is completed at the next available price, which could be higher (for a buy) or lower (for a sell) than expected.

Example

Imagine placing a market order to buy Bitcoin at $30,000. However, due to sudden price changes, your trade gets executed at $30,100. The $100 difference is slippage.

Negative and Positive Slippage

Negative slippage is when you click to buy ETH at $20,000 and end up paying $20,075. Positive slippage is if you click to buy ETH at $20,000, but end up buying it at $19,980.

Likewise, if you click to sell Bitcoin at $65,000, but end up selling it at $65,120, it’s positive slippage, whereas if you click to sell at $65,000, but end up selling at $64,900, it’s negative slippage.

Basically, when the market moves in your favor, it’s positive and when it moves in the opposite direction it’s negative.

The Sum Up

In short, slippage is when you don’t get the exact price you hoped for on a trade, often due to quick market moves or low liquidity.