Slippage is the difference between the price you expected on a trade and the price at which it actually filled. It happens because prices move continuously and because a large order may have to be filled across several price levels, each a little worse than the last.
It is most pronounced in fast-moving or thin markets. When liquidity is shallow, even a moderate order can push the price against itself, so the average fill ends up away from the quoted figure. Volatile conditions widen the gap further.
Traders manage slippage with limit orders, which cap the price they will accept, and by sizing orders to the available liquidity. Slippage is a real, often overlooked cost — the headline price is what you see, not always what you get.
Worked example
Expecting to buy at $100 but filling at $100.50 in a fast market is 50 cents of slippage.
This definition is general education, not investment advice. Markets — especially crypto — are volatile and you can lose money. Please read our disclaimer and see our methodology.