What is slippage tolerance?
Everything you need to know about slippage and how to set slippage tolerance in the FTX Exchange app!
In this Article:
- What is slippage?
- What is the slippage tolerance feature in the FTX Exchange app?
- How do I set the slippage tolerance?
What is slippage?
Slippage is the difference between the expected price of a trade and the actual price at which the trade is executed.
Say, for example, that you want to exchange some Ethereum (ETH) to Bitcoin (BTC), and when you initiate the exchange it shows that you will receive 1 BTC in return. However, when the order completes, you only receive 0.95 BTC. In this case, the slippage is 5%.
Slippage can be caused by high market volatility and/or low liquidity. High market volatility can mean a sudden change in price that occurs in the moments between when you confirm an exchange and when the exchange is executed.
Low liquidity might mean that there is not enough crypto at the quoted price to fill your order. Larger orders tend to have greater slippage because of liquidity issues.
What is the slippage tolerance feature in the FTX Exchange app?
The slippage tolerance feature makes it possible for you to set the maximum amount of slippage you are willing to accept in an exchange. If the slippage for your order is higher than the slippage tolerance you have set, your exchange will not be completed.
Using the previous example, if you set your slippage tolerance at 2%, you would either receive 0.98 BTC, or your exchange would not complete.
If your order does not complete because the slippage was higher than the slippage tolerance, you will not be charged any fees.
With this feature, you can avoid paying for unexpected high slippage on your exchanges.
How do I set the slippage tolerance?
Open your Exodus wallet and navigate to the FTX Exchange app.
In the FTX Exchange app, click
In the settings menu, click
Slippage Tolerance, you can a) choose a pre-set percentage, or b) manually enter a custom percentage. You are welcome to change the slippage tolerance at any time!