What is slippage in crypto? Causes, examples and tolerance
Slippage is the difference between the price you expect when you place a trade and the price it actually fills at. In crypto it happens most with market orders in thin markets or during sharp price moves, and it is an extra cost on top of trading fees that many beginners never notice.
Slippage can work against you or, less often, in your favour. You can’t eliminate slippage completely, but you can keep it small with the right order type and settings.
What is slippage in crypto?
Slippage in crypto is the price difference between the expected price of a trade and its actual execution price. If you click “buy” at a quoted €1.00 and your order fills at an average of €1.02, you have 2% slippage.
It isn’t unique to crypto. Slippage in trading happens in stock trading and on the forex market too, especially around major news events. But crypto markets trade around the clock, many coins have little market liquidity, and prices move fast, so slippage in crypto trading tends to be larger and more frequent than in major currency pairs or large company shares.
Positive slippage and negative slippage
Slippage has two directions:
- Negative slippage is when you get a worse price than you expected: you pay more when buying or receive less when selling. This is the one that hurts.
- Positive slippage occurs when the price moves your way before the order fills, so you get a better price than your intended price.
On an order-book exchange both happen. On a decentralized exchange (DEX), the swap usually gives you the better result automatically if the price improves, but the protection against the worse result depends on your settings.
Why slippage occurs
Slippage occurs because the price you see is only the best price available for a small amount at that moment. Two things push the final price away from it.
Low liquidity
In low liquidity markets there are few orders waiting at each price level. A large market order “walks the book”: it fills the cheapest sell orders first, then has to take more expensive ones until it is complete. The bigger the order relative to the market, the more significant slippage you get. That is why small tokens and illiquid markets are where slippage hurts most.
Market volatility
During high volatility, prices move between the moment you place an order and the moment it fills. A few seconds can be enough during heightened volatility after big news, a sharp rally or a liquidation cascade. On a DEX, network congestion adds delay: your swap waits to be included in a block while the market price moves.
An example of slippage
Say you want to buy €3,000 of a small token whose quoted price is €1.00. The order book looks like this:
| Sell orders waiting | Price | Cost |
|---|---|---|
| 1,000 tokens | €1.00 | €1,000 |
| 1,000 tokens | €1.02 | €1,020 |
| 1,000 tokens | €1.05 | €1,050 |
A €3,000 market order takes all 1,000 tokens at €1.00 (€1,000), all 1,000 at €1.02 (€1,020), and then 933.33 tokens at €1.05 for the last €980. You receive 2,933.33 tokens instead of 3,000. Your average price is €3,000 ÷ 2,933.33 = about €1.0227, so the slippage percentage is about 2.27%, or roughly €67 at the quoted price. That comes on top of the exchange’s trading fee.
The same €3,000 order on Bitcoin, where the order book is far deeper, would usually barely move the price at all.
Slippage tolerance on a DEX
Slippage tolerance is the maximum price deviation you accept on a swap before it is cancelled. You set it as a percentage in the swap settings of a decentralized exchange or wallet.
With a 0.5% tolerance on a €1,000 swap, you are telling the smart contract: “give me at least €995 worth of the other token, or cancel the trade”. The app usually shows this as a “minimum received” amount.
Choosing an optimal slippage tolerance setting is a balance:
- Too low (for example 0.1% on a volatile token) and the swap often fails. You still pay the network fee for the failed transaction.
- Too high (for example 10% or more) and you invite bad fills. Bots watch pending swaps and can trade just before and after yours to push your price to the edge of your maximum slippage tolerance.
For large, liquid tokens, 0.5% or lower is common. Only raise it for tokens that really need it, and then only for small amounts.
How to avoid slippage
You can’t avoid slippage completely, but you can limit slippage to a fraction of a percent on most trades. Here is what works for retail traders.
- Use limit orders. A limit order sets a specified price: it fills at that price or better, never worse. It is the most direct way to avoid negative slippage. See our page on limit orders and the overview of order types.
- Trade liquid pairs. Big coins on large exchanges, quoted in euros or major stablecoins, have deep order books and high trading volume.
- Split large orders. Several smaller orders spread over time take less from each price level than one big market order.
- Avoid the busiest moments. Big news and sudden price swings are when the gap between expected and executed price is widest.
- Check the quote. Many apps show an estimated price impact before you confirm. If it is more than you expected, reduce the size.
Some broker-style apps offer a fixed quote that removes slippage on your side, but the cost moves into the spread. Bitvavo’s optional Price Guarantee, for example, trades against Bitvavo with a spread built into the price, and Bitvavo doesn’t publish its size (see our Bitvavo review).
Slippage in forex and stock trading
Slippage works the same way in forex trading and stock trading, but usually on a smaller scale. Major currencies such as the euro and the US dollar trade in enormous volumes, so forex slippage on major currency pairs is typically tiny, except around central bank decisions or other major news events, when prices can jump past waiting orders.
Shares of large companies trade on deep, regulated markets during set hours. Slippage there is mostly an issue at the opening bell, after company results, or in small stocks that rarely trade. Crypto combines everything that causes slippage: thousands of thinly traded tokens, markets that never close (including quiet nights and weekends), and price fluctuations of several percent within minutes.
Stop orders are where many traders meet slippage first. A stop-loss turns into a market order once it is triggered, so in a fast fall it can fill well below the stop price you set.
Why slippage matters to you
Slippage matters because it is a cost you don’t see on the fee page. A 0.10% trading fee looks cheap, but if the same trade slips 1%, the slippage costs ten times more than the fee. For someone investing €100 a month in Bitcoin with market orders on a large exchange, it is usually small. For anyone buying small tokens, trading around major news or swapping on a DEX, it can be the biggest cost of the trade.
In the EU, licensed brokers and crypto platforms that execute orders for you must take reasonable steps to get you the best possible result. That doesn’t remove slippage: it means the platform shouldn’t add to it. Your order type and timing still make the biggest difference.
The bottom line
Slippage is the gap between the price you expect and the final execution price. It grows with order size, low liquidity and fast markets. Use limit orders where you can, keep DEX slippage tolerance tight, and treat any price impact above 1% as a reason to trade smaller or not at all.
Related terms
Questions people ask
Is 0.1% slippage good?
Yes. On a €1,000 trade, 0.1% slippage costs about €1, which is low for crypto. Large coins on busy order books often fill with even less; small tokens on a DEX can slip several percent.
Is higher or lower slippage tolerance better?
Lower is usually better, because it caps how much worse a price you accept. Set it too low, though, and your swap may fail when prices move, so you pay the network fee without trading.
How do you calculate slippage?
Subtract the expected price from the price you actually paid, divide by the expected price and multiply by 100. Buying at €1.0227 when you expected €1.00 is 2.27% slippage.
Can slippage be positive?
Yes. If the price moves in your favour between placing and filling an order, you get a better price than expected. On most order-book exchanges positive and negative slippage both happen, but traders tend to notice the negative kind.
Does a limit order stop slippage?
A limit order never fills at a worse price than the one you set, so it prevents negative slippage. The trade-off is that it may fill only partly or not at all if the price moves away.