Definition
Slippage is the difference between the price you expect when you place a trade and the price at which the trade actually executes.
How it works
Slippage happens when the market moves between the moment you see a price and the moment your order fills, or when your order is larger than the quantity available at the best price. In an order book, a large market order works through several price levels, so its average fill price moves away from the first quote. On a decentralized exchange, the trade itself changes the pool's token ratio and therefore the price.
It is usually measured as a percentage: slippage = (executed price − expected price) ÷ expected price for a buy, and the reverse for a sell. It tends to be larger in thin markets with little liquidity, during fast moves around news and for large orders. Slippage can also be positive: if the price moves in your favor before the fill, you get a better price than expected.
A limit order prevents slippage beyond its limit, at the risk of not filling. Decentralized exchanges offer a slippage tolerance setting: the swap fails if the result would be worse than the accepted percentage. A very high tolerance lets more swaps go through but leaves room for bots to trade just before and after your swap at your expense, an attack known as a sandwich.
Example (hypothetical numbers)
Suppose you swap $1,000 for Token X quoted at $2.00, expecting 500 tokens, with a 1% slippage tolerance.
The minimum you accept is 500 × (1 − 0.01) = 495 tokens.
If the swap delivers 497 tokens, your average price is $1,000 ÷ 497 ≈ $2.0121, about 0.6% worse than quoted.
If the price moved so far that only 490 tokens would arrive, the swap would fail instead, and on most networks the gas fee is still paid.
The example shows that the tolerance caps how much slippage you accept, while a higher setting fills more often at potentially worse prices.
Common mistakes
- Looking only at trading fees when slippage on a large order costs more.
- Raising the slippage tolerance on a DEX far above normal just to make a swap go through.
- Expecting the quoted price on a market order in a thin market or during major news.
- Assuming slippage is always negative.
Related calculators
This glossary is for education only and is not investment advice. Examples use hypothetical numbers.