What is slippage?

A beginners guide to slippage. What does it mean & how is it relevant to cryptocurrency trading?

Slippage refers to the deviation between a trade's expected price and the price at which it is actually performed.

Slippage can occur at any moment, but it's more common when market orders are placed during periods of higher volatility. Slippage is a common problem for investors who predominantly trade in cryptocurrency markets.

Cryptocurrency traders should be aware of slippage. When placing a trade order, if slippage tolerance is set too high then frequent traders can expect to incur significant costs over time. Alternatively setting tolerance too low could mean that cryptocurrency traders may struggle to execute the trades they want.

When purchasing a cryptocurrency that includes a tax, it's critical that the slippage encompasses the tax percentage. For a token with a 10% tax, the baseline slippage would be 10%, and adding trading volumes on top of anything between 1% and 3% would normally result in a slippage of 11% to 13%.

Many decentralized cryptocurrency exchanges will have pre-set or expected slippage percentages for a smoother trading experience, although this is often customizable for users who wish to alter their slippage tolerance.

Slippage is automated in AnjiSwap for an optimized trading experience for users, however, AnjiSwap users can adjust their slippage tolerance by clicking on the settings icon.

About the Author

Nick White
Chief Technology Officer

Nick leads the technical operations for the Anji Foundation working hands on with the developers at AnjiLabs.