Slippage
What Is Slippage?
Slippage refers to the difference between the expected price of a trade and the actual price at which it is executed.
This concept describes the deviation between the price you anticipate when placing an order and the final execution price. Whether you pay more when buying or receive less when selling, both are considered slippage. Slippage is common with market orders and on-chain swaps, as prices shift progressively with order size and available liquidity.
Key factors affecting slippage include market depth (available order book liquidity), order size, matching and network confirmation speed, and overall market volatility. Generally, thinner depth, larger orders, slower execution, and greater volatility result in higher slippage.
Why Is Understanding Slippage Important?
Slippage impacts both trading costs and risk exposure.
High slippage during buying means your actual purchase price may exceed expectations, raising costs; during selling, it can lower realized returns. For frequent traders and those placing large orders, cumulative slippage can be significant.
Slippage also affects trade execution success rates. On-chain transactions often set a “slippage tolerance”—if set too low, trades may fail; if set too high, you risk execution at undesirable prices during volatile periods.
In derivatives and leveraged trading scenarios, slippage can compound with trigger prices and liquidation risk. For example, during a sharp market drop, insufficient depth may cause stop-loss orders to execute at much worse prices, increasing potential losses.
How Does Slippage Work?
Slippage is driven by liquidity, execution speed, and volatility.
On centralized exchanges (CEX), market orders are filled sequentially from the best available prices in the order book. Larger orders are more likely to cross multiple price levels, creating “price impact” and resulting in slippage. Limit orders specify acceptable price boundaries and only execute within those limits, helping avoid unexpected slippage.
On decentralized exchanges (DEX), automated market makers (AMM) use algorithms to determine prices based on the ratio of assets in a liquidity pool. A single swap changes these balances, moving the price along a curve—the larger the order, the greater the price movement and slippage. Setting a “slippage tolerance” ensures trades only execute if the price deviation stays within a defined percentage.
Execution speed and network congestion are also crucial. Slow on-chain confirmations or congested blocks mean that the price at submission can differ from the price at execution. Intense volatility or frontrunning (commonly referred to as MEV) can further increase discrepancies between expected and actual prices.
Common Manifestations of Slippage in Crypto Trading
Slippage is a frequent occurrence in crypto trading.
For example, on Gate’s spot market, buying ETH with 1,000 USDT via a market order in a thin order book will sequentially fill from the best ask prices upward, resulting in an average execution price above the displayed rate—this is slippage. Using limit orders allows you to cap your maximum purchase price and minimize unexpected outcomes.
On Gate Web3 swaps or other DEXs, users often set “slippage tolerance.” Setting this to 0.5% means that if the actual price deviates by more than 0.5%, the transaction will revert, helping avoid poor execution during high volatility.
In liquidity mining (depositing assets into pools for trading fees) or concentrated liquidity market making, narrower price ranges amplify each trade’s impact on pool prices, increasing slippage risk. LPs must balance earning potential against risks of depth depletion from active trading.
In NFT auctions or batch minting, while not traditional order book depth scenarios, settlement prices may diverge from expectations—especially when network congestion and soaring gas fees cause delays—producing slippage-like effects.
How Can You Reduce Slippage?
Several strategies can help minimize slippage:
Step 1: Review order book depth and split orders. Check Gate’s depth panels before trading; avoid large single trades that consume multiple price levels. Breaking large trades into smaller ones can reduce average slippage.
Step 2: Use limit orders instead of market orders. Setting clear price boundaries in spot or derivatives trading ensures execution only within your acceptable range, helping control slippage costs.
Step 3: Set appropriate slippage tolerance for swaps. Typical ranges are 0.1%–1%. For stable pairs or low volatility periods, set lower tolerances; during high volatility, raise them slightly to avoid failed transactions—but not excessively.
Step 4: Choose deeper pairs or better routing. Prioritize trading pairs with higher volumes and deeper pools. On Gate Web3 or other aggregators, enable RFQ (request-for-quote) and MEV-protected routing to minimize frontrunning and unnecessary price impact.
Step 5: Avoid trading during congestion or extreme volatility. Slippage rises sharply during major announcements or rapid market swings. Choose periods with ample liquidity and stable prices for executing trades.
Step 6: Estimate costs and build in buffers. Factor potential slippage into your trading plans and position management to avoid unexpected profit-and-loss discrepancies due to ignored slippage effects.
Recent Trends & Data on Slippage
Slippage has become more manageable over the past year.
In 2025’s first half, average slippage on mainstream stablecoin pairs remained low for small- to mid-sized orders. Based on public depth panels and community dashboards, USDC/USDT trades between $1,000–$10,000 typically saw DEX pool slippage around 0.02%–0.10%, while major CEX pairs were usually below 0.05%, as observed in Q3–Q4 2025.
For volatile pairs like ETH/USDC during stable periods, $10,000 trades often experienced 0.10%–0.30% slippage; but during rapid market moves or network congestion, median slippage temporarily spiked to 0.50%–1.00%. Community dashboards in Q3 2025 highlighted a correlation between elevated slippage and peak gas fees.
Compared to all of 2024, multi-chain DEXs in 2025 improved RFQ and MEV-protected routing coverage; aggregators more frequently split large orders across pools or resorted to off-chain quoting. Estimates suggest average slippage for similar-sized trades dropped by about 20%–40% (with significant pair-dependent variation), thanks to deeper concentrated liquidity and refined market making strategies.
On CEXs, Q4 2025 saw increased top-tier order book depth for leading pairs. Public depth snapshots suggest platforms like Gate achieved average market order price impact below 0.05% for $10,000 BTC/USDT and ETH/USDT trades; larger trades should be evaluated in context of daily volumes and current book conditions.
Key Terms
- Slippage: The difference between trade execution price and expected price, typically caused by insufficient market liquidity or high volatility.
- Liquidity: The ease with which assets can be traded in a market; higher liquidity generally means lower slippage.
- Trading pair: A unit of exchange consisting of two assets (e.g., ETH/USDT represents Ethereum paired with a dollar-pegged stablecoin).
- Price impact: The direct effect large trades have on market prices, which can increase transaction costs.
- Automated Market Maker (AMM): An algorithmic system in DEXs that provides liquidity automatically, enabling users to trade directly with smart contracts.
FAQ
Why does slippage occur during trading?
Slippage happens because market prices can change between the moment you place an order and when it is executed. Large trade volumes, intense volatility, or limited liquidity cause expected prices to differ from actual execution prices—this difference is known as slippage. Beginners often incur extra costs due to lack of understanding about slippage.
What should I do if I encounter slippage while trading on Gate?
You can mitigate slippage by setting reasonable slippage tolerances on Gate (typically 1–3%) to prevent order rejections; choose trading pairs with strong liquidity for faster fills at stable prices; and trade during off-peak periods when markets are calm to minimize slippage risk.
Is there a difference in slippage between small and large trades?
Yes—small trades generally have minimal slippage because they are filled quickly; large trades can consume available market depth rapidly, causing significant price movements and higher slippage. Professional traders often split positions into smaller batches rather than entering with full capital at once.
Is slippage the same in spot and futures trading?
No. In spot markets, slippage is mainly determined by liquidity; futures trading involves additional complexity due to leverage and contract mechanisms, as well as funding rates and sudden price swings. When trading futures on Gate, pay special attention to slippage settings to avoid unwanted liquidations.
How do I assess whether my trade’s slippage is excessive?
Compare the percentage difference between expected and executed prices. Typically, 1–2% slippage is normal; anything above 3–5% warrants caution. Frequent high-slippage indicates poor liquidity in chosen pairs—consider switching to more liquid assets or using platforms like Gate for better outcomes.
References & Further Reading
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