Slippage is the difference between the price a trader expected when placing an order and the actual execution price or average execution price.

Slippage commonly occurs when large market orders consume multiple price levels, when liquidity is limited, or when the market moves rapidly.

Example

Suppose the best available BTC sell price is $60,000, but only a small amount is available there. A large market buy order may execute at $60,000, then $60,020, $60,050, and higher levels. The resulting average price is higher than the initially displayed price.

Slippage depends on order size, order-book depth, volatility, and how quickly market prices are changing.

Reducing slippage

  • use limit orders when appropriate;
  • split large orders into smaller parts;
  • trade on more liquid markets;
  • check market depth before placing large orders.