The difference between expected and actual trade execution price.
Slippage is the difference between the expected price of a trade and the price at which it actually executes. Slippage occurs when market conditions change between the moment a trade is submitted and the moment it is filled.
In crypto, slippage is most common on volatile markets or low-liquidity trading pairs.
Why Slippage Happens
Low liquidity in the order book or liquidity pool
Large market orders that move through several price levels
High volatility causing rapid price shifts
Network congestion delaying transaction confirmation
AMM pricing formulas adjusting during swaps
Positive vs. Negative Slippage
Negative slippage: Trade executes at a worse price
Positive slippage: Trade executes at a better price (less common)
Slippage increases with larger order sizes and thin liquidity.
How to Reduce Slippage
Use limit orders on CEXs
Set slippage tolerance on DEXs
Trade during stable market periods
Choose deep-liquidity pairs
Break large trades into smaller ones
Summary
Slippage is the difference between the expected and actual execution price of a trade, often caused by volatility or thin liquidity.
