Here we cover crypto trading slippage meaning and tolerance.
- Crypto slippage is more important for very large trading amounts since you move the market price in one trade.
- Therefore, liquidity and trading volume are also critical.
- Binance has the most trading volume and low slippage among all exchanges.
- Kraken and Coinbase have the most liquidity among the US exchanges in the spot market.
We compare the slippage for some of the major crypto markets at some of the top Bitcoin and altcoin trading sites.
Crypto Trading Slippage – Per Exchange
➤Crypto trading slippage refers to the difference between the market price of a trade and the price at which the trade is executed.
The slippage is dynamic and changes all the time and the data below is just s snapshot to give an overview.
- +2%: How much capital do you need to move the market price +2%? We use the BTC/USD (or USDT) market in the table.
- -2%: How much capital do you need to move the market price -2%? We use the BTC/USDT market in the table.
The data is taken from Coingecko.
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What does crypto trading slippage mean?
➤Crypto trading slippage refers to the difference between the market price of a trade and the price at which the trade is executed.
How can a trade difference between the market price and the execution price?
There are several factors that can cause this and the crypto trading spread and the crypto trading slippage are the two most common.
The slippage can appear in any trade but is most visible when a large market trade is executed in a thin order book.
The above occasion will cause the market trade to have to accept higher ask orders or lower bid orders since the order book is thin in volume.
What is a trading slippage tolerance in DeFi?
In Defi, at Uniswap and Pancakeswap, there is no order book.
When you buy at the market price you can set “Slippage Tolerance” as a percentage. Instead to place limit orders in price, you set limit orders as slippage tolerance.
Trading slippage example
An example of crypto trading slippage is if you want to buy 4 Bitcoin and the market price is $50.000 (The market price reflects what the latest agreed trade was executed for)
However, in the order book, you find these selling orders
- 2 Bitcoin for $50.010
- 2 Bitcoin for $50.020
Your average buy price is now $50.015 and the spread was $10 and the slippage $5.
Binance – Low Slippage Trading Exchange
- Binance is the number one crypto exchange when it comes to trading volume and low slippage.
- In addition, Binance offers some of the lowest crypto spot trading fees.
Coinbase – Low Slippage for USA Traders
- Coinbase has great liquidity in the BTC trading pairs.
- Also, the crypto exchange is regulated in the US and allows US citizens to signup and deposit fiat currency.
- Coinbase has relatively few listed cryptocurrencies.
MEXC Global – Low Slippage and Low Trading Fees
- MEXC Global has both low slippage and free crypto spot trading.
- MEXC Global is a popular crypto exchange because of the generous non KYC withdrawal limits.
Kraken – US Altcoin Exchange with low Slippage
- Kraken is one of the best altcoin exchanges for US customers.
- Kraken has similar liquidity and slippage to Coinbase in the BTC/USD trading pair but Kraken has more listings than Coinbase.
- Kraken has futures trading for USA.
How to find the best exchange with the lowest crypto trading slippage?
There is an easy way to find the best exchange with the lowest crypto trading slippage.
One way to measure slippage is how much capital you need to move the market. If you need a little amount of capital to move the market a lot, the slippage is high and vice versa.
At Coingecko, there is a tab marked as +-2%. This means how much capital you need to move the market 2% in either direction.
You find the tab by going to Coingecko and searching for your market. After this, you find a market tab where you click.
- If the amount of capital is large the slippage is low. This is what large traders are looking for and often they might even trade off the market via an OTC desk (over the counter).
