What is slippage or market displacement?
Updated on Thu, 8 Sep, 2022 at 1:15 PM
When making a purchase, sale or swap transaction of a cryptocurrency that is in a moment of high volatility or lack of liquidity, the transaction may be executed with a different quotation price than the one indicated in the transaction summary. This also happens when the amount of the transaction performed is too high.
When this happens, a notification appears in the summary window indicating this slippage or market displacement.
Slippage or market displacement is the difference between the price at which a purchase, sale or swap order is placed and the price at which it is actually executed.
This difference usually occurs when 3 different scenarios are considered:
- When there is a high point volatility in a cryptocurrency/token. In other words, there is a very high volume of transactions at that time.
- When there is low liquidity. This situation is generated when there is little or no trading between different operations, causing very high peaks registered in a matter of seconds due to low liquidity at that moment.
- When the transaction to be performed is too high.
In the first two scenarios, the user can assume the risk of price movement or wait market to become stable again. In the third scenario, you can contact our OTC department o carry out this operation.
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