What Is Slippage?
Slippage is a financial term that describes the difference between the expected and settled price of a trade. Slippage is found in all markets but commonly occurs in volatile cryptocurrency markets.
Slippage occurs when a cryptocurrency trade is set on an exchange but a sudden change in market conditions causes the price of the pending trade to ‘slip’ higher or lower before it is executed.((Uniswap Docs – Slippage))
It is commonly experienced on decentralized exchanges (DEXs), where certain cryptocurrencies may have lower liquidity and trading activity.
Slippage is calculated in a percentage, usually 0.1-5% of your order value. Slippage tolerance is the amount of change you can tolerate, this is set prior to the execution of your trade. If the price is below or above your slippage tolerance, the trade will not take place.