#BinanceJumble
Slippage in trading refers to the difference between the expected price of a trade and the actual price at which it is executed. It occurs when market conditions, such as rapid price fluctuations or a lack of liquidity, cause the trade to be filled at a price different from the one requested by the trader.
Here's a more detailed explanation:
Expected vs. Actual Price:
When you place an order to buy or sell an asset, you expect it to be executed at a specific price. However, market conditions can change rapidly between the time you place the order and when it's executed.
Market Volatility:
Volatile markets, especially during periods of news events or economic releases, can lead to significant price swings, increasing the likelihood of slippage.
Lack of Liquidity:
If there isn't sufficient demand or supply at the requested price, the order might be filled at the next available price level, resulting in slippage.
Algorithmic Trading:
While algorithmic trading can improve efficiency, it can also contribute to slippage by causing rapid price changes and phantom liquidity.
