Slippage refers to the price difference between the market price and the deal price. When the position is placed, the price may change because of the fluctuation, causing you to trade higher or lower than expected. This happens because both the buy price and the trade size must match the sell order of the same price and size. When there is an imbalance between the buyer and the seller, the price needs to be adjusted to the second-best.
What causes the slippage?
The first reason is network latency. Typically, after a customer submits an order, the information is submitted over the network to the server. In this transmission process, there are often relatively small delays that may not be noticed, but price deviations can occur in the event of severe market fluctuations.
The second reason is the market quotation fault. Under normal circumstances, the quotes in the market with sufficient liquidity are continuous. However, in the case of large market fluctuations or large amounts of direct access to the market, there will be a price fault. If the Stop Loss/Take Profit cannot cover the price gap, the price you set will not be filled and the final price will jump to the latest market quote.
How to avoid slippage?
Slippage is hard to avoid completely but can be reduced. From the TokenomyX perspective, one way is to ensure sufficient liquidity. The other way is to provide multiple trading methods, such as Stop Loss/Take Profit and manually adjustable slippage, to help users avoid slippage beyond expectations.
What causes the slippage?
In TokenomyX, users can set default slippage values for different contracts for their account on the trade page. The slippage is measured in points, meaning you can adjust the maximum slippage offset you can accept.
For BTC/IDK contract, one point means price change 1. As an example, if the current purchase price is 130,000IDK and the slippage is set to 50, then your deal price will be less than or equal to 130,050. If the current selling price is 129,500 IDK and the slippage is set to 50, your deal price will be greater than or equal to 129,450.
At the same time, for each open or close trade, you can set the maximum slippage you can accept for that position in the confirmation popup.
Under what circumstances does the slippage work?
The value of the slippage that you set is activated when you open a position, when the order is triggered, or when the position is closed manually.