# Slippage Risk ⎊ Area ⎊ Resource 3

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## What is the Definition of Slippage Risk?

Slippage risk quantifies the potential loss incurred when a trade executes at a price different from the price quoted at the time the order was placed. This discrepancy arises from the time delay between order submission and execution, during which market prices can fluctuate. The magnitude of slippage is measured as the difference between the expected price and the final executed price.

## What is the Cause of Slippage Risk?

Slippage is primarily caused by low liquidity, high market volatility, and network congestion. In decentralized finance, large orders can significantly impact the price within an automated market maker pool, leading to substantial slippage. High network traffic on blockchains can also delay transaction confirmation, increasing the window during which price changes can occur.

## What is the Mitigation of Slippage Risk?

Traders mitigate slippage risk by implementing order routing strategies that seek out the best available price across multiple exchanges. For large orders, splitting the trade into smaller chunks can reduce market impact. In decentralized protocols, setting a maximum acceptable slippage tolerance ensures that transactions only execute if the price deviation remains within predefined limits.


---

## [Dynamic Liquidation Fee Floors](https://term.greeks.live/term/dynamic-liquidation-fee-floors/)

## [Liquidation Efficiency](https://term.greeks.live/term/liquidation-efficiency/)

## [Order Book Thinning Effects](https://term.greeks.live/term/order-book-thinning-effects/)

## [Order Book Viscosity](https://term.greeks.live/term/order-book-viscosity/)

## [Order Book Data Visualization Tools and Techniques](https://term.greeks.live/term/order-book-data-visualization-tools-and-techniques/)

## [Delta and Gamma Sensitivity](https://term.greeks.live/term/delta-and-gamma-sensitivity/)

## [Maintenance Margin Threshold](https://term.greeks.live/term/maintenance-margin-threshold/)

## [Security Trade-off](https://term.greeks.live/term/security-trade-off/)

---

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