Price Slippage

Price slippage is the difference between the expected price of a trade and the actual price at which it is executed. This occurs when the order size is large relative to the available liquidity at the current market price, forcing the trade to consume multiple levels of the order book.

In volatile markets, slippage can also occur due to the time delay between order submission and execution. For large traders and institutional investors, managing slippage is a primary concern, as it directly impacts the profitability of their positions.

Liquidity providers attempt to minimize slippage by maintaining deep pools, while traders use limit orders to specify their maximum acceptable price. Excessive slippage is a clear sign of an inefficient or illiquid market, and it is a critical metric for evaluating the quality of any trading venue.