What Is Slippage?

Slippage occurs when the final execution price of an order is different from the price you saw when placing the order. It commonly happens during periods of high volatility or when market liquidity is insufficient.

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1. Why Does Slippage Occur?

   Slippage happens when the market price moves before your order is executed, or when the order book does not have enough depth to fill your entire order at the expected price.

   Common Causes of Slippage

   • High volatility — prices move rapidly within seconds

   • Insufficient order book depth — large orders “eat through” available liquidity

   • Market orders — execute instantly at the best available price, even if the price changes

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1. How Does Slippage Affect Your Trades?

   Slippage can result in:

   • Higher-than-expected buy prices

   • Lower-than-expected sell prices

   • Increased trading costs

   • Differences between expected and actual PnL

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1. Which Orders Are Most Prone to Slippage?

   • Market orders (most common)

   • Large orders

   • Trades in low-liquidity markets or inactive trading hours

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1. How to Reduce Slippage

   You can minimize slippage by:

   • Using limit orders to control execution price

   • Trading in high-liquidity pairs

   • Avoiding periods of extreme volatility

   • Splitting large orders into smaller batches