Recently, I’ve seen many people suffer losses in trading, and a big reason is actually due to the issue of slippage. I’ve noticed that many beginners don’t really understand what slippage is, and as a result, they find their accounts shrinking after just one buy and sell.

Simply put, slippage is when the price you expect to get when placing an order is different from the actual price at which the order is executed. It sounds basic, but this thing can secretly eat away at your profits. For example, you want to buy 5 XYZ tokens with $1,000, averaging $200 per token. After placing a market buy order, the price suddenly surges, and you only get 4.5 tokens, but your average cost becomes $220. That’s slippage at work.

Why does this happen? There are mainly two reasons. One is that the market moves too quickly, and within the few milliseconds between your order and its execution, the price has already changed. The second is insufficient liquidity, especially in small coins or less popular trading pairs, where the depth of buy and sell orders is shallow, and your large order can easily cause a price impact. I saw an example before: a whale wanted to buy $8.65 million worth of WIF, but due to liquidity issues, most of the buy orders were filled at absurdly high prices, making the actual cost much higher than expected. This is a typical case of encountering slippage with large trades.

To reduce losses caused by slippage, my advice is to use limit orders instead of market orders. Limit orders give you full control over the execution price, although they might be slower to fill, they can save you a lot of money. Also, pay attention to trading fees, because when combined with slippage, the hidden costs of a single trade can be much higher than you think. Next time you trade, think about whether there’s a better way to avoid slippage, so you can survive longer in the market.