Slippage
Difference between expected and actual order execution price.
Slippage is the difference between the price at which you planned to buy/sell and the price at which the order was actually executed.
Causes:
•Illiquidity — few orders in order book, large order "eats through" multiple price levels
•Volatility — price moves while order waits for execution
•Network congestion — on DEXs, price can change while transaction waits in mempool
Example:
•You want to buy 10 BTC at $60,000
•Liquidity at $60,000 is only 3 BTC
•Remainder bought at $60,050, $60,100...
•Average price = $60,030 — that's slippage
How to minimize slippage:
•Use limit orders
•On DEXs reduce slippage tolerance (but risk failed transaction)
•Split large orders into smaller ones (TWAP)
•Trade during high liquidity periods