SO IT GOES Slippage, a concept in cryptocurrency that basically describes the difference between expected price of a cryptocurrency and the actual price you end up buying it or purchasing it for and this price difference is as a result of different factors ranging from the volatile nature of the cryptocurrency market, liquidity and the size of order, slippage is basically one of the frustrating realities of cryptocurrency trading that every investor eventually encounters, whether you are a newcomer still learning the ropes or already a professional who is well versed with the world of cryptocurrency and the cryptocurrency market.

Therefore in the simplest terms slippage in regards to the cryptocurrency market happens when the price at which you place a trade ends up being different sometimes the difference is so significant from the price at which it gets executed therefore in the fast moving and always evolving market of cryptocurrency this can mean losing more money than expected or not getting the exact amount of a token you were aiming for although slippage is a natural part of trading, especially in volatile environments however, there are practical ways to minimize its impact and disadvantages therefore, In this post we are going to look at key strategies to help prevent slippage and keep your cryptocurrency transactions accurate and cost effective.

USE LIMIT ORDERS INSTEAD OF MARKET ORDER

Basically one of the most effective ways to control slippage in the cryptocurrency market is by using limit orders instead of market orders, this because when you place a market order, you're essentially telling the exchange that they should excute a buy or sell order or that they should buy or to sell a particular token or digital asset at the best available price right now, the problem with that is that, in highly volatile markets or those with low liquidity, the best available price can change in just seconds very rapidly therefore your trade might get executed at a far worse and unfavorable price that you intended yet it might still be the best price available at that particular time.

On the other hand a limit order is a type of order that when used or implemented allows you to specify the exact price you're willing to pay or accept, using limit order is much preferable and would be perfect except that it might take a bit longer for the order to fill, especially if the market isn't moving in your favor, but at least you're protected from unexpected price swings, to understand how limit order is more preferable consider this; for example, if you're trying to buy a token for $1.50 and you set a limit order at that price, the trade will only go through if someone is willing to sell it to you at that amount or better this also gives you far more control, especially during periods of fhigh volatility.

AVOID LARGE ORDERS ON LOW LIQUIDITY PAIRS

Another common cause of slippage is trading large orders on pairs or coins that are known to be low liquidity pairs this is particularly true on decentralized exchanges (DEXs) where trades happen directly from liquidity pools rather than order books therefore when you submit a large trade relative to the pool size, you end up significantly moving the price against yourself this phenomenon or concept is known as price impact basically price impact can be said simply to be the effect in which a particular trade has on the market price of a cryptocurrency.

Therefore to prevent this, tradere should consider breaking large trades into smaller chunks and executing them over time doing this basically reduces the pressure on the market and helps you maintain better average pricing, also these decentralized exchanges should allow you to preview your slippage and set a limit, that is a maximum allowable slippage percentage if they are not already doing so, so that if the price should move beyond that range or limit during the transaction, it would be stopped and would be prevented from going through therefore users should always pay attention to this setting if it is facilitated by their exchange platform, this can save you from costly surprises, especially on thinly traded tokens.

CONCLUSION

In conclusion, we have learnt that slippage is sometimes unavoidable but it doesn't have to be something that always leads to or cause us significant profit loss, it can be avoided and minimized basically by making strategic plans and preparations like using limit orders, timing your trades during high volume periods, and avoiding large orders on low liquidity pairs, yes these strategic steps will help you minimize the effects of slippages and then you can take more control over your trades in cryptocurrency trading market.