Slippage: where it comes from

Slippage is the difference between the price you expected when placing an order and the price at which it was actually filled. It occurs when the order book lacks offers at the expected price, so the order “eats through” the next, worse levels. It affects centralized and decentralized exchanges, where the price depends on the size of the liquidity pool.

Slippage grows with large orders, thin markets and sharp moves, for example after major data releases. It is usually unfavorable, though it is occasionally favorable. You can limit it with limit orders, by splitting a large position into parts and by trading during hours of high liquidity. On DEXes, meaning decentralized exchanges, many apps let you set a maximum slippage tolerance, and exceeding it cancels the transaction.