1. What is slippage?
Slippage refers to the difference between the expected execution price of an order and the actual price at which it is filled. It typically occurs during periods of high market volatility or when liquidity is insufficient.
In general, slippage is more likely when placing market orders in volatile conditions. It can also occur when large orders are executed in markets with limited depth, causing fills at multiple price levels.
Example:
When you place a buy order at $100.10. In fast-moving markets or when there is insufficient liquidity at that price level, the order may instead be filled at $100.20. The $0.10 difference is considered slippage.
For buy orders:
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If the execution price is higher than the expected price, this is negative slippage (higher trading cost).
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If the execution price is lower than the expected price, this is positive slippage (lower trading cost).
For sell orders, the opposite applies.
2. What causes slippage in the crypto market?
(1) Insufficient liquidity
When market depth is limited, large market orders may not be filled at a single price level. Instead, they are executed across multiple price levels, resulting in an average execution price that differs from the expected price.
Example:
If a user intends to buy 100 BTC at 70,000 USDT, the order may be filled as follows:
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40 BTC at 70,000 USDT
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30 BTC at 70,001 USDT
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30 BTC at 70,002 USDT
The final average execution price would be 70,000.9 USDT, resulting in 0.9 USDT of slippage.
Note: Larger order sizes and lower market liquidity generally lead to greater slippage.
(2) Market volatility
Due to the high volatility of the cryptocurrency market, prices may change between the time an order is placed and when it is executed, resulting in slippage.
Example:
At the time of order placement, the order book shows:
BTC bid/ask = 69,990.5 / 70,000 USDT
During execution, prices may shift rapidly due to market movements or large trades:
70,000.5 / 70,001 USDT
The order is ultimately filled at 70,001 USDT, increasing the cost by 1 USDT per BTC, with a total slippage of 100 USDT.
Note: The higher the volatility or the longer the execution delay, the greater the slippage risk.
3. How to reduce slippage
(1) Use guaranteed price features
If you want to avoid slippage, you can enable Guaranteed Take Profit (GTP) / Guaranteed Stop Loss (GSL) when setting TP/SL orders.
These features ensure that orders are executed at the specified price, subject to platform rules.
(2) Use limit orders
Unlike market orders, which are executed at the best available price, limit orders allow you to set a specific execution price, helping you better control trading costs.
However, limit orders are not guaranteed to be filled. In low-liquidity conditions, they may be partially filled or remain unfilled.
(3) Split large orders
Large orders require more liquidity and often take longer to execute, making them more susceptible to slippage.
To reduce slippage, consider splitting large orders into smaller batches to minimize market impact.
Disclaimer
This content is for reference and educational purposes only and does not constitute any investment, trading, or legal advice, nor does it represent an offer or solicitation to buy or sell any digital assets. Digital asset trading involves high risk and price volatility. Please participate with caution.
During trading, slippage may occur due to market volatility, liquidity conditions, and other factors, resulting in differences between expected and actual execution prices, and may lead to additional costs or losses. Please refer to the latest announcements and actual interface for accurate information.
