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Author: Admin | 2025-04-28
When you set your slippage tolerance, your provider will fill as much of your order as possible (sometimes not all for large orders) while staying within the price bounds that you have specified.Let’s look at an example with a hypothetical ether (ETH) trade. ETH Price: $3,000Slippage Setting: 2%If you were to place a buy order on ETH at $3,000 with a 2% slippage tolerance, that order would not be filled if the price of ETH were to rise 2% higher ($3,000 + $60) from when you sent the trade to when it was actually filled (confirmed on a blockchain). For sell orders, the same rules would apply, but on the downside. Your swap will cancel automatically if slippage exceeds your designated level.But remember, slippage can lead to a better price as well!Slippage: Market and Limit OrdersSome crypto trading platforms in both DeFi and centralized finance (e.g., Binance and Coinbase) offer limit and market orders. Limit orders specify a price at which you are willing to be filled. They are often used to take profits. With these order types, you will not be filled worse than the price you specified so slippage is not an issue (in most cases).Market orders are filled immediately at the current market price, regardless of what that may be. Setting your slippage for market orders, therefore, is very important.Slippage Percentage CalculatorIn order to determine the slippage you received on any filled order, use the below formula:Slippage Calculation:Slippage (%) = (Executed Price – Expected Price) / Expected Price) * 100Let’s look at an example with a bitcoin (BTC) buy trade.BTC anticipated price: $65,000BTC actual price: $64,800Now we just plug the numbers in.Slippage Calculation: (65,000 – 64,800) / 64,800* 100Slippage: 0.3%In this buy example, slippage resulted in a higher fill price. Just as often, however, slippage will lead to lower prices. 📚 Read next: What are gas fees and how do they work?Slippage SummaryCrypto traders would be wise to designate a slippage percentage before sending trades. Trading crypto assets can be a very risky business; taking every precaution possible will help your crypto portfolio over the long term. Note: Slippage is used in many financial markets, including forex.
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