The way that slippage works is say you see that Bitcoin is crashing like 20% all off a sudden. And you want to buy because it’s a discount. So instead of making a limit order you use a market order and what usually happens, especially with many Bitcoin exchanges is that your order gets processed but doesn’t fill until a long while later. Basically maybe 30-60 seconds later when price is already higher up and you got a bad fill and bought at the top.
There is also slippage when you use a stop market order. You picked a bad area for a stop loss for example $50000 which everybody else uses and it breaks $50000 and you don’t get a fill another there is some liquidity found and it’s usually at the bottom before it bounces.
These are 2 examples of slippage and it’s why backtesting is never accurate.
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But not all slippages mean a loss. Positive slippage can occur if the price goes down while you place a buy order or increases if you place a sell order. Although it is uncommon, positive slippage may occur in some highly volatile markets.
Wrong. There is nothing like positive slippage. There is no way the price goes down after you place your buy order (or up after you place sell order). Its not caused by your order. You just created limit order and price went up and filled your order. Its not positive slippage. Its limit order that was filled.
It occurs in markets with high volatility or low liquidity.
It occurs almost always. The only moment you was not affected by slippage is when your Oder is filled with first bid/ask or you put limit order under present spot price. The size of slippage depends on market liquidity (which can be low/high regardless of volatility) and your order size.
You have made a good thread and the items you have discussed are those that have really given traders much confusion to trade. Talking about spread for example, it has a way that it relates to market price. It is the difference between buy and sell and the difference is the commission to brokers , that is it is regarded as the profit for them. However, the difference fluctuates as price fluctuates. There are different ways that spread operate and a new trader needs to research, study and understand it.
I have never used a CEX which have the option directly as slippage but have seen coinbase has this feature according to their website- https://help.coinbase.com/en/coinbase/trading-and-funding/advanced-trading/slippage
Is it possible that we can compare the stop loss with this feature? I guess yes?
I think it is more like a slippage when we swap coins on DEX. Coinbase provide services for merchants and this article writes about liquidity that only found on DEX. I have never known that people talk about liquidity on CEX.Is it possible that we can compare the stop loss with this feature? I guess yes?
Slippage is different than cut loss, because your trade won't be executed and finished if you set slippage is irrelevant to available liquidity. It is difference of slippage than stop loss.
About slippage, in my understanding it is only exists on DEX such as Pancakeswap, Uniswap, 1inch. Or does it exist on centralized exchanges too?
I have never used a CEX which have the option directly as slippage but have seen coinbase has this feature according to their website- https://help.coinbase.com/en/coinbase/trading-and-funding/advanced-trading/slippageIs it possible that we can compare the stop loss with this feature? I guess yes?
I know about Bid-Ask spread and Order book, walls that have roles as temporary resistances and supports. Without big news, big chances, price will be controlled and stucked in range between big buy and sell walls.
About slippage, in my understanding it is only exists on DEX such as Pancakeswap, Uniswap, 1inch. Or does it exist on centralized exchanges too?
Correct me if I am wrong about slippage.
About slippage, in my understanding it is only exists on DEX such as Pancakeswap, Uniswap, 1inch. Or does it exist on centralized exchanges too?
Correct me if I am wrong about slippage.
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