Slippage is the difference between the expected price of a trade and the price at which the trade actually executes. Slippage often occurs during periods of high volume and volatility. It can also occur when large orders are placed on exchanges with low liquidity. Slippage is generally a negative experience for traders, as it indicates that they are paying more for their assets than they expected to.
When you place an order to buy or sell an asset on an exchange, you generally expect to pay the market price for that asset. However, sometimes the price at which your order executes can be different from the market price. This difference is called slippage.
Slippage is more likely to occur during periods of high market volatility, when there is a lot of trading activity, or when you place a large order. It can also occur on exchanges with low liquidity, where there are not enough buyers or sellers to match all the orders.
In most cases, slippage is a negative experience for traders. That’s because it means you are paying more for your assets than you expected to. For example, if you wanted to buy 1 BTC at $10,000, but the order only filled at $10,200, you would have paid $200 more than you wanted to.
There are some cases where slippage can be positive, however. For example, if you were trying to sell 1 BTC at $10,000, but the order only filled at $9,800, you would have made $200 more than you expected to.
In general, you can avoid slippage by placing limit orders instead of market orders. Limit orders allow you to set the price at which you want to buy or sell an asset. However, even limit orders are not guaranteed to fill at the price you want. If the market is very volatile, your order may still experience slippage.
The best way to avoid slippage is to trade on exchanges with high liquidity. This way, there are always enough buyers and sellers to match all the orders, and the prices are less likely to move around.
Other related questions:
Q: What is slippage in crypto example?
A: Slippage is the difference between the price of a security at the time it is bought or sold and the price that was expected. Slippage often occurs during periods of high volume or volatility.
Q: Does slippage matter in crypto?
A: Slippage is the difference between the expected price of a trade and the actual price at which the trade is executed. Slippage can occur when there is a lack of liquidity in the market, which can cause the price of an asset to move suddenly and unexpectedly. Slippage can also occur when a trade is executed at a different price than what was expected.
Q: How is crypto slippage calculated?
A: There is no definitive answer to this question as there are a number of different ways to calculate slippage. Some methods may place more emphasis on the impact of order size on slippage, while others may focus on the timing of orders. Ultimately, it is up to the individual trader to determine which method best suits their needs.
- Slippage | Alexandria – CoinMarketCap
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