Definition
Slippage is a trading concept that describes the gap between the price a trader intends to buy or sell at and the price at which the order is actually filled. It appears as either positive slippage, where the execution is at a better price, or negative slippage, where the execution is worse than expected. In crypto markets, slippage is common during periods of fast price movement or when trading large orders against limited liquidity.
Slippage can occur on both centralized exchanges, often called a CEX, and on decentralized trading venues. It is especially noticeable in leveraged products such as leverage-based instruments, futures, and perpetual futures, where price changes are amplified. In some on-chain environments, extreme forms of price impact and slippage can be associated with manipulative behaviors such as a sandwich attack, where transaction ordering affects the final execution price.
Context and Usage
In trading, slippage is typically measured as the percentage or absolute difference between the quoted price at order submission and the final fill price. It reflects how efficiently a market can absorb an order without significantly moving the price. Higher volatility and thinner order books tend to increase the likelihood and size of slippage.
Slippage is a neutral concept but is often discussed as a form of trading cost because negative slippage effectively makes a trade less favorable than planned. In derivatives markets such as futures and perpetual futures, slippage can interact with leverage to magnify the financial impact of even small price differences. On a CEX or on-chain venue, awareness of slippage helps characterize how stable or unstable execution prices are under different market conditions.