What is slippage, and why should you care 💸
If you’ve ever bought any asset because of that fact, you may have encountered slippage. It’s a concept that affects all kinds of markets, and #crypto is no exception.
👉 Slippage in trading refers to the difference between a trade's expected and actual outcome. It occurs when a trader fills an order at a different price than anticipated.
Example: You want to buy 5 XYZ tokens for $1000 with an average price of $200 per token. You press "market buy" and see that the price of $XYZ jumped up, and you only have 4.5 XYZ tokens with an average price of $220 🫤
What happens is the slippage of a price; it can happen due to market volatility or, more often, low market liquidity. See the example in the picture above: A whale bought $8.65 million worth of $WIF ; however, due to slippage, a major part of his buying order was filled at insanely high prices, and he is down a lot... 🤷♀️
Tip: Want to save money? Use limit orders and pay attention to trading fees.
