Slippage
trading
The difference between the expected trade price and the actual execution price after liquidity and timing effects.
Slippage is the gap between the price a trader expects and the price actually received. It occurs when the market moves before execution or when the order is large relative to available liquidity.
On automated market makers, slippage grows as a trade consumes more of the pool’s reserves. Traders often set a slippage tolerance, but a wide tolerance can expose them to worse execution or front-running.
Related terms
Market Order
→An instruction to trade immediately against available orders, prioritizing execution over a guaranteed price.
trading · exchange
Liquidity
→How easily an asset can be bought or sold in size without causing a large price move.
finance · trading
Order Book
→A real-time list of buy and sell orders organized by price level on an exchange.
trading
Bid-Ask Spread
→The difference between the highest bid and lowest ask price for an asset.
trading