What is Slippage in Crypto and How to Avoid It

When buying or selling cryptocurrency, the price you pay will not always be the same as the market price. This is because of slippage, which is the variance between buying and selling prices due to market liquidity and bid-ask spreads. Slippage can be a frustrating experience for new traders, but with some knowledge about how it works and its causes, you can reduce the chances of this occurring again. Read on to learn more about slippage in crypto and how to avoid it.

What is Slippage in Crypto?

Slippage is the difference between the expected price at which you place a trade and the actual price you get. It occurs when the market moves quickly against your position. In this case, your order becomes unfilled or partially unfilled. Slippage occurs when there is not enough liquidity in the market. This could be because there are not many buyers or sellers at the price you want to trade at. It could also be because the market is moving quickly and your order takes too long to be filled. Slippage is when you get a worse price than you expected. This is because the difference between the expected price at which you place the trade and the actual price you get. This can be more than a few dollars, but it could also be just a few cents.

How to Trade Without Slippage

There are a few things you can do to trade without slippage. First, you can choose a time when the market is relatively quiet. This should give you more chance of getting the expected price. The best times to trade are usually when the market is open, but it is not in the middle of a major event. You can also choose to trade more liquid pairs. These are pairs that have a higher volume of trading and are more likely to be filled at or very close to the expected price.

Why Does Slippage Occur in Crypto?

Slippage occurs because of a few factors. First, many exchanges do not offer a guaranteed price. This means that if you place a trade and the market goes against you, you could end up with a worse price. So, if you trade on a day when the market is moving quickly, you may get a worse price than you expected. Another cause of slippage is high volatility. If the market is moving quickly, then a large order may have an impact on the price. This means that the price you get for your order may be much different than expected. If you are trading a less liquid pair, there is a higher chance that your order will not be filled at all. This is because not enough buyers or sellers are available to make the trade.

Tips to Avoid Slippage When Trading Crypto

There are a few things you can do to avoid slippage. You can check the liquidity of the pair you want to trade. This means that you should check the volume of trading over a 24-hour period. A higher volume is likely to lead to fewer issues with partial fills or unfilled orders. You should also try to avoid trading during major events. This means that you should avoid trading on the weekends and during times of high volatility. This will give you more time to complete your trades and less chance of slippage.

Conclusion

Slippage can be a frustrating experience for new traders, but with a few tips and tricks, you can avoid it. You should check the liquidity of the pair you want to trade with and avoid trading during major events. You can also try to trade during quiet times of the day when the market is less volatile.

Note: This is not financial advice. This how-to article is for educational purposes only. Please note that cryptocurrency is a highly volatile asset class; only invest what you can afford to lose.