Slippage is the gap between the price you see when you submit a trade and the price you actually get.
Where it comes from
- Price impact. In a small liquidity pool, your own trade moves the price. The bigger your trade relative to the pool, the worse your average price.
- Price movement. In fast markets the price can change between submitting your transaction and it being processed.
Slippage tolerance
Trading apps let you set a maximum slippage. If the price moves beyond it, the trade fails instead of filling at a bad price. Memecoin traders often raise tolerance to get fills in fast markets. That is exactly how they overpay, and very high tolerances can be exploited.
Tips
- Check the pool's liquidity before sizing a trade.
- Use the lowest slippage tolerance that still fills.
- Split large trades in thin pools.
Educational content only. Not financial advice.