Slippage

Slippage occurs when you execute a trade at a different price than expected. It's a natural consequence of market mechanics, but can be costly if not managed.

Causes of slippage: - Low liquidity: fewer orders at each price level means your trade moves the price more - Large order size: bigger trades eat through more of the order book - Market volatility: prices changing rapidly between order placement and execution - Network congestion: transaction delays on blockchain can cause price changes

Types: - Positive slippage: you get a better price than expected (rare, but happens) - Negative slippage: you get a worse price than expected (more common)

Managing slippage: - Set slippage tolerance: most DEXs let you set maximum acceptable slippage (0.5-3%) - Use limit orders: specify exact price on centralized exchanges - Split large orders: break into smaller trades to reduce price impact - Trade during high-volume hours: more liquidity means less slippage - Choose liquid trading pairs: stick to high-volume assets

On DEXs, setting slippage too low can cause transactions to fail. Setting it too high (10%+) can expose you to front-running bots that exploit your tolerance.