1. What Factors Can Cause Slippage in Crypto Market
(1) Poor or insufficient liquidity on exchanges
When a trading platform lacks liquidity, executing large market orders may deviate from the expected price. For instance, if a user intends to buy 100 BTC at a price of 20,000 USDT, the execution might unfold as follows:
- 40 BTC of the order gets matched with a sell order at the price of 20,000 USDT;
- 30 BTC of the order gets matched with a sell order at the price of 20,001 USDT;
- 30 BTC of the order gets matched with a sell order at the price of 20,002 USDT.
In this case, the average execution price becomes 20,000.9 USDT, which is higher than the requested price (20,000 USDT), resulting in a slippage of 0.9 USDT.
2. How to Avert Slippage
(1) Guaranteed price feature exclusively on BingX to avoid slippage losses
If you want to eliminate slippage, we recommend ticking the "Guaranteed SL" when you set up Stop Loss (SL). This guarantees that your SL order will be executed at the exact expected price.
This feature supports Guaranteed Price for Trigger Orders and Guaranteed SL for SL orders. It is currently available for the following trading pairs: BTC, ETH, XRP, SOL, LTC, BCH, ADA, BNB, MATIC, RNDR, DOGE, and LINK. More pairs will be supported, stay tuned.
See also: Perpetual Futures Upgrade: Exclusive Guaranteed Price Launched to Prevent Slippage Losses
(2) Opt for Limit Order over Market Order
Different from a market order which is filled at the best available price, a limit order is preset with a specific price and you will trade only at your requested price. Note that this doesn't guarantee your whole order will fill at your requested price, and only a partial amount may be executed.
(3) Do your own research when choosing a trading platform
Slippage is prevalent throughout cryptocurrency trading, whether you're an institutional investor or a retail customer. BingX deeply understands that the transaction cost is a major consideration to users, therefore it has been seeking and partnering with top liquidity providers to enhance its market liquidity and deliver the best bid and offer prices. Also, it will effectively lower the occurrence of unfilled/partially filled orders at set prices by trading when the market is stable, further mitigating the risk of slippage.
You can also use Algorithmic Trading Strategies (ATS) like Volume Participation (VP) and Time-Weighted Average Price (TWAP) to help efficiently execute your orders and avoid slippage in the same manner.
If you have any doubts or opinions regarding the liquidity of cryptocurrencies when trading Perpetual Futures, feel free to share your feedback with us.