# Price Slippage ⎊ Area ⎊ Resource 3

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## What is the Execution of Price Slippage?

Price slippage is defined as the deviation between the price at which a trade order is submitted and the final price at which the transaction is executed. This discrepancy arises from the time delay between order submission and execution, during which market conditions can change. In fast-moving cryptocurrency markets, slippage is a common occurrence, particularly during periods of high volatility or significant news events.

## What is the Volatility of Price Slippage?

The primary driver of price slippage is market volatility, where rapid price fluctuations cause the market price to move away from the order price before the transaction can be confirmed. Low liquidity exacerbates this issue, as large orders cannot be filled at a single price point and must execute across multiple price levels. This results in a less favorable average execution price for the trader.

## What is the Risk of Price Slippage?

For derivatives traders, price slippage represents a significant execution risk that can erode potential profits or increase losses. Automated trading strategies must incorporate slippage tolerance parameters to manage this risk effectively. In decentralized finance, network congestion and block finality delays contribute to slippage, making it a critical factor in calculating the true cost of a trade.


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## [Solvency Delta Preservation](https://term.greeks.live/term/solvency-delta-preservation/)

## [Proof-Based Market Microstructure](https://term.greeks.live/term/proof-based-market-microstructure/)

## [Transaction Volume Impact](https://term.greeks.live/term/transaction-volume-impact/)

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**Original URL:** https://term.greeks.live/area/price-slippage/resource/3/