Crypto 101 Daily

You decide to buy at a price you saw on screen — but when the trade goes through, you got a slightly worse deal than expected. That gap is “slippage,” and understanding it helps you avoid nasty surprises, especially with smaller coins. Here’s the plain-language explanation.

What slippage is

Slippage is the difference between the price you expected to trade at and the price you actually got. You might intend to buy at $100, but by the time your order fills, you paid $101 — that $1 difference is slippage. It can happen on both buys and sells, and it can go against you or, occasionally, in your favour.

Why it happens

Two main reasons. First, prices move constantly, so in the brief moment between you placing an order and it executing, the price can shift — especially in fast-moving, volatile crypto markets. Second, and often bigger, is liquidity: if there aren’t enough orders at your desired price, your trade “eats through” the available orders and fills at progressively worse prices. A large order in a thin market can move the price as it executes.

When slippage bites hardest

This is the key beginner lesson. Slippage is usually tiny and barely noticeable when trading big, liquid coins like Bitcoin in normal conditions. It becomes a real problem with small, low-liquidity coins, during volatile moments (like a sudden crash or spike), and with large orders. Those are exactly the situations where you might expect one price and receive a meaningfully worse one. The more obscure the coin, the worse slippage can be.

How to protect yourself

A few practical defences. Using a limit order — where you set the exact price you’re willing to accept — protects you from bad slippage, though it risks the order not filling if the price never reaches your level. A market order fills immediately but accepts whatever price is available, which is where slippage hits. Many trading interfaces also let you set a “slippage tolerance” that cancels the trade if the price would move beyond a limit you choose. And simply favouring large, liquid coins and avoiding trading during chaotic moments reduces slippage naturally.

Key takeaways

Slippage is the gap between the price you expected and the price you actually got, caused by fast-moving prices and especially by low liquidity. It’s tiny for big liquid coins in calm conditions but can be severe with small coins, large orders, or volatile moments. Protect yourself with limit orders, a sensible slippage tolerance, and by sticking to liquid coins and calmer times. This is education, not financial advice.

New here? Slippage is closely tied to what liquidity means, and the order types that manage it are in market vs limit orders. It’s also why a stop-loss isn’t a guarantee.