Hi there, this is Lucky Ali, and welcome back to my new article. Understanding slippage is important, and is final execution price is not always the same, and it can be less or more than you expected. Newcomers in crypto are always shocked to see that. For example, a forex or stock market trader new to crypto trading may trade in crypto for the first time. When they encounter slippage, they are often in shock. So that is why I said it is important to understand, because it is a crucial subject.
Direct relation with liquidity
Usually, slippage is a headache for the altcoins, mostly because altcoins do not have high liquidity like Bitcoin and Ethereum, which is why it is a bigger issue here. The crypto market is known for its volatility, and slippage is directly connected with the volatility of crypto because price moves fast within a few seconds. Let's understand it with an example. Let's say you are buying bitcoin at $70000, but the market has moved to $70100 during the market order. So this is called negative slippage, and there is positive slippage too, and that is if the price moves to 69900, then it is positive slippage, which means you are getting a benefit.
We can say liquidity is a driver of slipage. As I said, Bitcoin and Ethereum have high liquidity, which is why slippage is smaller here because there are lots of buy and sell orders in these coins compared to the other altcoins. They are basically the queen and king of crypto. One single order can change the price with a big difference in smaller coins, which is why this is a real and big issue for the smaller coins.
Order types: market orders and limit orders
Order type also needs to be discussed. So there are market orders and limit orders. I have used the market orders option when I needed to buy or sell instantly, and it can do it for you at the best price. A higher chance of facing slippage in this type of trade. When it comes to limit orders, the order may take time to be completed, but you can buy or sell at your desired price. Limit orders protect you from slippage.
So wanna save yourself from slippage? The best option is the limit orders option. Here you can set your desired price to sell or buy your cryptocurrencies. Yes, it takes time to fill the orders, but you should avoid slippages. Especially with the altcoins and lesser-known coins, you must do it.
I am not an expert in trading, but there is some information that needs to be discussed, and you should know about it. I hope you liked this important information and prevents your mistakes. Share this information and also share a comment below. I will meet you in my next blog. Have a good day.
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 | Hi I am lucky ali from gujarat, india. I am a crypto enthusiast, blogger, and SEO developer. You can find me on hive, twitter and discord (Lucky Ali#6343). Sharing is caring. Thank you, hive family ♥ |