What is slippage in crypto trading?
Quick Answer
Slippage is the gap between the price you expected and the price your order actually fills at. It happens when the market moves between click and execution, or when your order is big enough to eat through the order book.
TL;DR
Expected price minus filled price = slippage. Limit orders cap it; volatile moments amplify it.
Key Takeaways
- 1Market orders accept whatever price is available — that's where slippage lives
- 2Limit orders eliminate negative slippage by definition
- 3Thin order books and volatile news moments amplify it
- 4On DEXs you set slippage tolerance explicitly
Full Explanation
Place a market buy and your order takes the cheapest available sell offers, one by one. If the first offer covers only part of your size, the rest fills at progressively worse prices — the average ends up above the price you saw on screen. That difference is slippage, and it also appears when prices simply move in the milliseconds between your click and the exchange matching it.
Three things make it worse: order size relative to the book's depth, the asset's liquidity (Bitcoin on a major exchange is deep; a small altcoin is not), and timing — during violent moves the book thins out exactly when everyone is rushing to trade.
The defenses are simple: use limit orders for anything beyond pocket change (you set the worst price you'll accept — the order either fills at it or better, or not at all); trade liquid pairs on major exchanges; and avoid market orders during news spikes. On decentralized exchanges, the slippage tolerance setting does this job — set it tight, and remember an overly generous tolerance is what sandwich bots feed on.