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Rachel Welch

15 November 2022 144 Read Crypto

What Is Slippage in Crypto?

Slippage is a term used in crypto trading to indicate the difference between the intended and actual prices of a transaction. It can be expressed as a dollar amount or a percentage. Slippage is calculated by subtracting the expected price from the actual price. If the slippage is negative, the trader will lose money. If it is positive, he or she will gain money.

As crypto is a speculative instrument, slippage is inevitable. A single tweet or headline can trigger a sharp increase or decrease in price. In addition, cryptocurrencies have low liquidity, which means that the price of a single coin can change drastically in a matter of seconds. This lack of liquidity results in high levels of slippage. Some exchanges, such as Coinbase, display slippage costs on their applications, so that investors can avoid trading when their assumptions are wrong.