What is slippage in trading?
Slippage is the gap between the price you expected and the price your order actually filled at. It appears whenever you demand immediacy — market orders, stop-losses triggering, fast markets — and it is largest exactly when you most need it to be small: during crashes and in thin altcoins.
How it works
An order book only has so much size at each price. A market buy for more than the best ask absorbs deeper, worse-priced levels until it is filled — the average fill lands above the quote you saw. Calm markets in BTC might slip you 0.01%; a mid-cap altcoin during a sell-off can slip several percent. Stop-losses convert to market orders when triggered, so in a cascade your "stop at $95" may fill at $93.
How traders manage it
Use limit orders when entry timing isn't critical; trade liquid pairs and liquid hours; keep size small relative to book depth; and budget slippage into your risk math — a plan risking 1% that routinely slips 0.3% is actually a 1.3% plan. Slippage is also the quiet killer of over-backtested strategies: the chart's fills were free, yours aren't.
FAQ
Is slippage a fee the exchange charges? No — it isn't charged by anyone. It is a market cost that comes from consuming order-book depth; the exchange's actual fees come on top of it.
Can slippage ever help me? Yes, rarely: limit orders in fast markets can fill at better prices than requested ("positive slippage"). Plan around the negative kind anyway.
Every key term, one roadmap
The 56-lesson map, the sizing cheat sheet, the pre-trade checklist — one free PDF.