What Is Slippage in Crypto?

Your stop is a trigger, not a promise. Slippage is the gap between the two, and it shows up at the worst possible moment.

This is for the trader who wants their planned risk to be their real risk. Ever stared at a fill and said "that's not where my stop was"... you're in the right place.

Why didn't my stop fill at my stop? That's slippage

A standard stop doesn't lock in an exit price. It sits on the platform as a trigger. When the last traded price touches it, a market order goes out to close the position, and that order takes whatever bids (or offers) are there. Deep order book? The fill lands at or very near the stop. Price falling fast, or a thinly traded coin? The order eats through several price levels and fills below the trigger.

Two more costs stack on top. The bid and ask spread means a market sell fills at the bid, which can sit below the last traded price. And trading fees are charged on the full size of the position, not the margin. Crypto trades around the clock, so true overnight gaps are rare, but fast wicks during news or a liquidity sweep do the same job in seconds.

What does the slippage tolerance setting do?

Many leveraged platforms let you set the maximum deviation you'll accept on a market close. It's a ceiling, not a prediction.

Chad is specific about his: "I run a 1% slippage. Now you can go up to 5%." That 1% is a tolerance, the most the close may deviate, not an expected cost. On liquid pairs real slippage is usually far smaller. On thin coins, or during major news, it can be larger. One more reason to keep size modest on those trades and to avoid stacking big positions into scheduled events.

So how do you plan for slippage?

In the size. Never in the stop. Illustrative numbers only: a long BTC trade at $60,100 with the stop at $59,600, $500 away, meant to cost about $100 if it fails, 1% of a $10,000 account.

• Without a slippage allowance: $100 divided by $500 gives 0.2 BTC. If the stop fills $60 lower, at $59,540, the realized risk is 0.2 times $560, or $112, plus fees.
• With a slippage allowance: size from the stop distance plus an estimate of slippage. $100 divided by $560 is 0.178 BTC; round down to 0.17 BTC. The same $60 of slippage makes the realized risk 0.17 times $560, or about $95, plus fees.

The stop never moved. Still $59,600, at the invalidation level. Only the size changed, and only downward. That keeps the Decision Protocol intact: invalidation first, size from the distance to it, every rounding going down.

What's the wrong fix for slippage?

Padding the stop. A trader worries about slippage, pushes the stop further away and keeps the same size. Now the stop isn't at invalidation, the risk is bigger than planned, and the slippage still happens on top. Congratulations... you paid twice. The answer to slippage is a smaller position, never a different stop.

The second mistake is leaving fees and slippage out of the math. Small on one trade, big over a hundred. Your expectancy and your break-even point under the 1:3 filter are both calculated before costs, and the real numbers are always a little worse. Funny how the screenshot crowd never posts their fills.

What slippage check should you do today?

Open your last ten stopped trades and compare each fill to its stop price. Average the gap. That's your real slippage, and it goes into your next size.

Learn how execution fits risk in crypto risk management and crypto leverage trading, then read stop loss slippage and gaps and crypto position sizing. Related terms: stop loss and position sizing.

Source: Investor.gov notes that a market order almost always executes, but the price you get can differ from the one you expected. That difference is slippage.