Spread and slippage: what does it mean for your trades

Every trader faces a problem: you want to buy BTC for $50k, but you actually pay $50.15k. It's not a mistake – it's the spread and slippage that quietly take your money.

How does it work?

Spread is simply the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. On exchanges with high liquidity, (BTC, ETH) the spread is negligible – often less than 0.01%. On smaller altcoins, it can be 1-3%, which seriously impacts profitability.

Slippage is when your market order is executed at a price different from what you saw. The reason: if you are paying a large volume, the order book is not deep enough, and the exchange is forced to take offers at worse prices to fill your order.

Real example

Do you want to buy $10k altcoin. On paper, the price is $1. But in the order book, there is only $2k for $1, then $3k for $1.05, then $5k for $1.10. Your order will go through at an average price of about $1.07 – this is a slippage of 7%.

How to minimize losses?

1. Break large orders – instead of $10k at once, split into five of $2k with an interval
2. Use limit orders – they guarantee the price, but may not be executed quickly.
3. Keep an eye on the depth chart – always check how much liquidity is available before placing a large order.
4. Set tolerance on DEX – on Uniswap/PancakeSwap you can manually set the maximum slippage.

Plus: positive slip

Rarely, but there are situations when the market changes in your favor – you sell higher or buy cheaper than you expected. This happens more often in volatile markets.

Conclusion: Spread and slippage are a reality of crypto trading. Understanding the mechanics saves money, especially if you are trading on a DEX or with altcoins.