Title: Fun and Unobtrusive Guide: Understanding the "Placing Order Will Result in 2 Percent Slippage Coinbase" Phenomenon Hey there, fellow crypto enthusiasts in the US! Today, we're going to dive into the world of Coinbase and decipher what on earth it means when they mention "placing order will result in 2 percent slippage." Don't worry, we'll keep things light and breezy while unraveling this mysterious phrase! So, imagine this: you're all excited about making a cryptocurrency purchase on Coinbase, ready to jump into the exciting world of digital assets. But wait, what's this "2 percent slippage" that Coinbase is warning you about? Let's break it down in a fun and unobtrusive way. Picture yourself at a bustling marketplace where you've found a shiny new coin you want to buy. You approach the seller and quote a specific price at which you'd like to buy it. However, due to the volatile nature of cryptocurrencies, the coin's price might have changed slightly by the time your order gets executed. That very minute difference between your quoted price and the executed price is called "slippage." Now, Coinbase being the transparent platform it is, wants to keep you informed about
What is an example of slippage in crypto?
Slippage = Current Market Price – Executed Trade Price. For example, if you place a buy order for 1 Bitcoin when the market price is $12,500, and it gets filled at $12,300, your slippage would be $200 (12,500 - 12,300). This reflects a situation where the final price was lower than the expected price.
Is higher or lower slippage better?
A positive slippage gets an investor a better price than expected, while a negative slippage leads to a loss.
What happens if slippage is too high?
If your slippage is set too high, then you may get less tokens than expected when swapping. For example, if your slippage is set to 25%, then you may receive 25% less than the expected swap outcome (tokens) that is shown to you in the swap preview.
What is a good slippage tolerance in crypto?
A reasonable slippage tolerance would be set between 2% and 5%. Slippage matters in crypto as it determines your fill price. Slippage is of particular importance in illiquid and volatile markets. Low slippage is usually a sign that the crypto market you are trading is liquid, which is positive.
Is slippage illegal?
Asymmetric price slippage is different in the sense that traders are prevented from taking advantage of price improvements, with slippage only occurring when it works against the trade. This practice is illegal.