To control slippage, when brushing @binancezh Alpha, everyone says to set a 0.1% slippage for buying and a 0.2% slippage for selling. What does this mean?
When I was a child, my mother often sent me to the market to buy potatoes, frequently saying that if they were 0.5 yuan per pound, she wouldn't buy them. This indicates that the highest price my mother could accept for potatoes is 0.5 yuan/pound. Slippage also expresses the highest price you can accept.
For example, in the screenshot, you want to buy Fartcoin with 100 USDC, and currently, 1 Fartcoin = 1.038 USDC. When you set the slippage to 0.1%, you are actually telling the trading matcher (exchange/protocol): "The highest price I can accept is 1 Fartcoin = 1.038(1+0.1%)=1.039 USDC. If the price exceeds 1.039 USDC, the transaction will fail; at the same time, it also indicates that the minimum amount of Fartcoin I can accept to receive is 100/1.039=96.245 coins."
Key points:
1️⃣ Small slippage is not suitable for pools with low liquidity. If buying 100 USDC can cause a 5% price fluctuation, setting a 0.1% slippage will definitely fail.
2️⃣ What constitutes a pool with good liquidity: High TVL, high trading volume, good depth.
