Slippage is the difference between the expected price of a trade and the actual price at which it executes. It occurs on all exchanges, but is more significant on DEXes and with less liquid tokens.
Why It Happens
When you submit a buy order, the price changes while the transaction travels to the blockchain. On DEXes, your purchase directly affects the pool price — larger amounts mean higher slippage.
Example: You want to buy a token at $1. Due to low liquidity, your trade pushes the price to $1.05. You paid 5% more — that’s slippage.
How to Reduce It
- Trade on exchanges with high liquidity (Binance, Kraken)
- Use limit orders instead of market orders
- Split large orders into smaller ones
- On DEXes — set lower slippage tolerance (0.5-1%)
Disclaimer: This is not financial advice. Always do your own research.