When trading on crypto exchanges, there’s an issue that people ask about a lot: what is slippage? In fact, this is a perfectly natural situation caused by market volatility and insufficient liquidity.

To put it simply, slippage is the difference between the price you expect and the actual trade execution price. For example, you want to buy Bitcoin for $50,000, but when the order is executed, you end up buying it for $50,200. That $200 difference is slippage. In crypto markets, this is much more common than in traditional financial markets.

If you’re wondering why slippage happens, the answer is simple: market volatility and low liquidity. The bid-ask spread between buyers and sellers can be quite wide, especially for assets that don’t trade very often. When you move the market with an order, the price can change more than you expected.

There are practical ways to minimize this risk. First, use limit orders. This way, you can get the exact price you want—or even a better one. Yes, it might take a bit longer, but you’re protected from unfavorable slippage.

Second, split large orders into smaller ones. Keep an eye on the order book and don’t place orders that are much larger than the current available volume. Smaller orders fill faster, and the slippage risk decreases.

Third, be careful with assets that have low liquidity. For some tokens, even a single trade can cause significant slippage. For such assets, keep your trade size under control.

Fourth, take transaction fees into account. On decentralized exchanges, network fees sometimes end up doing more damage than slippage. Before you trade, research the fee structure of the exchange you plan to use.

In conclusion, the answer to “what is slippage?” is simple: it’s a natural part of the market. But once you understand it and apply the right strategies, you can significantly reduce your risks. To succeed in crypto markets, it’s essential to understand volatility and liquidity.