What Is Slippage in Crypto Trading?

Slippage in crypto trading refers to the difference between the expected price of a trade and the actual price at which it executes. This typically occurs in volatile or low-liquidity markets and can significantly affect trading outcomes. Understanding slippage and how to manage it is essential for traders aiming to optimize returns and reduce hidden costs.

Key Ideas

Slippage is caused by market volatility and insufficient liquidity, especially when large orders move through the order book and shift prices.
It is not a platform fee but an execution cost that can be mitigated through smart trading strategies like using limit orders, setting slippage tolerance, and trading during high-liquidity periods.

Why It Matters?

Sratups should focus on building deep liquidity pools when launching tokens or DeFi products. They can use incentives or partnerships to attract liquidity providers, ensuring smoother trading experiences and reducing slippage for users, which in turn boosts platform credibility and trading volume.