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What are the factors that contribute to slippage in the cryptocurrency market?

avatarGuvanch GaryagdyyevNov 25, 2021 · 3 years ago1 answers

Can you explain the various factors that can cause slippage in the cryptocurrency market? How do these factors affect the execution of trades and why is slippage a concern for traders?

What are the factors that contribute to slippage in the cryptocurrency market?
Cryptocurrency
Slippage
Trading

1 answers

  • avatarNov 25, 2021 · 3 years ago
    Slippage in the cryptocurrency market is a common occurrence that can affect traders' profits. It happens when the execution price of a trade deviates from the expected price. Several factors contribute to slippage, including low liquidity, market volatility, and delays in order execution. Low liquidity means that there is not enough trading volume in a particular market, making it difficult to buy or sell at the desired price. Market volatility refers to the rapid price fluctuations in cryptocurrencies, which can cause trades to be executed at different prices than anticipated. Delays in order execution can occur due to network congestion or technical issues with the trading platform. Slippage is a concern for traders because it can lead to unexpected losses or reduced profits. To mitigate slippage, traders can use limit orders and employ risk management strategies to minimize the impact of market fluctuations on their trades.

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