Slippage

Slippage is the difference between the price you expected your order to fill at and the price it actually filled at. It grows with low liquidity and during sharp moves.

How it works

A market order takes the best offers from the order book (the list of buy and sell orders). If there is not enough size at the best price, the rest fills at the next, worse prices. Your average entry then drifts away from the price you saw on screen.

Slippage is bigger when the order book is thin, when news comes out and when your order is large compared with the market. It can be positive if price moves in your favor, but in a fast market it usually works against you.

A stop-loss usually turns into a market order when triggered, so it can also fill worse than its set price. On decentralized exchanges you set a slippage tolerance yourself: if price moves further than that, the swap is cancelled.

Example with numbers 1

You buy 2 BTC at market while the screen shows $60,000. The book has only 1 BTC at $60,000 and the next 1 BTC at $60,050. Your average price is $60,025: slippage of $25 per coin, $50 on the whole trade.

Example with numbers 2

Your EUR/USD stop sits at 1.0800. On a major data release price jumps through the level and the stop fills at 1.0785. That is 15 pips of slippage and a bigger loss than planned.

Common mistake

A common mistake is entering with a large market order in a thin market or right on the news, then being surprised by the fill. If the entry price matters, use a limit order, split a large order into parts and do not trade big amounts in illiquid coins. On a DEX do not set a huge slippage tolerance: bots exploit it.

Questions and answers

What is slippage in simple terms?

You clicked buy at one price and the trade went through at another. That difference is slippage.

How do I avoid slippage?

You cannot remove it completely, but you can reduce it: trade liquid instruments, avoid news releases and use limit orders when price matters more than speed.

What slippage tolerance should I set on a DEX?

For liquid pairs 0.5–1% is often enough. A tolerance that is too high lets bots buy in front of you and sell to you at a worse price, while one too low makes the swap fail.

Slippage

How it works

Questions and answers

Related terms

Read next