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Slippage

When transactions are sent to Ethereum, the amount of gas given as a charge for performing each transaction determines the order in which they are executed.

The faster the transaction is completed, the larger the charge offered.

Transactions with a lower gas fee will be held in limbo for an unknown period of time.

As other swaps take place during this time, the price environment in which the transaction will eventually be conducted will change.

Slippage tolerances define an acceptable margin of adjustment for the user that is independent of pricing impact.

The transaction will be executed as long as the execution price is within the slippage range, for example, percent 1.

The transaction will fail if the execution price falls outside of the acceptable slippage range.

Avoidance Strategies​

No guarantees as crypto market is volatile.

  • Set stop-loss orders
  • Speed
  • Timing

Set stop-loss orders​

By setting a stop-loss order as a precaution in trading, you can effectively minimize your losses. A stop-loss guarantees you an exit when the price unexpectedly moves against you, thus enabling you to avoid slippage.

Speed​

Trade on a platform that executes the fastest.

You can certainly avoid unnecessary slippage when trading under a fast-executing broker. The less time your broker needs to process your buy or sell orders, the less time there is for the prices to change, ultimately limiting the possibility of an increase or decrease of slippage rate.

Timing​

Avoid trading during volatile market events

Markets are susceptible to developments within their respective spaces. Significant events and announcements concerning the crypto market can affect price movements considerably. Avoiding trading at these times will help you to avoid slippage, or at least minimize it.