Slippage

Slippage occurs when there is a difference between the expected price of a trade and the actual price at which the trade is executed. This phenomenon is common in fast-moving markets, such as cryptocurrency, where prices can fluctuate rapidly due to high volatility, low liquidity, or large order sizes. Slippage can lead to less favorable trade outcomes, as traders may end up buying at a higher price or selling at a lower price than anticipated, which can impact overall trading performance and profitability.

In cryptocurrency trading, slippage is an important factor to consider, especially for large trades or during periods of extreme market volatility. When placing a market order, the trade is executed at the best available price, which may differ from the price quoted at the time the order was placed. This price difference constitutes slippage, and it can either be positive (resulting in a better price) or negative (resulting in a worse price). Negative slippage can erode profits, making it crucial for traders to implement strategies to minimize its impact.