Glossary

Slippage

Plain-language definition Crypto glossary

Key takeaways

Slippage is the gap between the price you expect when you place a trade and the price you actually get when it executes.
It arises because prices move and liquidity is limited, so a large order may fill across several price levels at a worse average price, especially in fast-moving or thin markets.
On decentralized exchanges traders often set a "slippage tolerance," the maximum price change they will accept, to avoid being filled at a far worse rate.

Definition

Slippage is the gap between the price you expect when you place a trade and the price you actually get when it executes. It can work for or against you, but usually matters most when it costs you.

How it works

Slippage arises because prices move and liquidity is limited. Between the moment you submit an order and the moment it fills, the market can shift, and a large order may have to fill across several price levels, ending at a worse average price. It is most pronounced in fast-moving or thinly traded markets.

Why it matters

On decentralized exchanges, traders often set a “slippage tolerance” — the maximum price change they will accept — to avoid being filled at a far worse rate. Setting it too low can cause trades to fail; too high can expose you to bad fills or manipulation.

Example

Expecting to buy at $10 but having the order fill at $10.20 because of low liquidity is 2% slippage.

FAQ

Frequently asked questions

What causes slippage?

Slippage happens because prices move between submitting and filling an order, and because limited liquidity can force a large order to fill across several price levels at a worse average price. It is most pronounced in fast-moving or thinly traded markets.

What is a slippage tolerance setting?

On decentralized exchanges, slippage tolerance is the maximum price change a trader will accept before the trade is cancelled. Setting it too low can cause trades to fail, while setting it too high can expose you to bad fills or manipulation.

Is slippage always bad for the trader?

Not always. Slippage can move the price for or against you, but it usually matters most when it costs you. For example, expecting to buy at $10 but filling at $10.20 because of low liquidity is 2% slippage against you.