Slippage: Why Your Order Filled at a Different Price Than You Expected

Slippage is the difference between the price you expected to buy or sell an asset at and the price your trade actually executed at. Slippage can work in your favor or against you, but traders mostly notice the unfavorable cases.

Where it comes from

The main cause is insufficient liquidity: if the order book (or a liquidity pool on a DEX) doesn't have enough volume at your desired price, part of your order fills at progressively worse prices until the full amount is matched. The larger your order relative to available liquidity, and the higher the asset's volatility at the moment of the trade, the bigger the slippage.

Why it's especially noticeable in DeFi

On decentralized exchanges (DEXs) built on liquidity pools, slippage is baked into the mechanics: the pool's price automatically shifts in proportion to the size of your trade relative to the pool's size. That's why large trades in thinly traded tokens can execute at a price noticeably different from what was showing on screen before you hit confirm.

What to watch for

Most DEXs and trading interfaces let you set a slippage tolerance — the maximum acceptable price difference, beyond which the trade simply won't execute rather than filling at a bad price. Too low a tolerance can mean trades fail to execute at all during high volatility; too high, and you risk an unexpectedly bad fill. For large trades in low-liquidity assets, it's often sensible to split the order into smaller pieces to reduce total slippage.

This material is for educational purposes only and is not investment advice.