Price movements can cause the traders to settle for another price than what was initially requested by them. Such situations are called slippages. Whenever a buy or sell order is placed by a crypto trader on the exchange, the trader expects the order to get fulfilled at the chosen price. However, in some cases, this does not happen which results in what is known as slippage.

This phenomenon is present in every market, such as stocks and forex, and not just crypto. However, this is more frequent and worse in the case of the crypto market due to the volatile nature of the industry. Low volume and liquidity are also a few of the reasons for slippage to take place.

Slippages are of two types. A positive slippage is one where the executed price is lower than the expected price for a buy order as it provides traders with better entry into the market. Negative slippage on the other hand happens when a price higher than the expected price gets executed during a buy order. This is an unfavorable situation for the buyer. The opposites are true for sell orders. Traders often execute limit orders rather than market orders to reduce the slippage, if not completely eliminating them.

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