Slippage is the difference between expected and executed trade prices. Understanding and managing slippage is crucial for profitable DEX trading.
Why Slippage Happens
AMM-based DEXs use liquidity pools where prices change with each trade. Large trades or low liquidity pools create more price impact. MEV bots can also front-run your trades.
Slippage Tolerance Settings
Most DEXs let you set maximum slippage tolerance. 0.5% works for stable pairs, 1-3% for volatile tokens. Too low = failed transactions. Too high = vulnerable to sandwich attacks.
Minimizing Slippage
- Trade on high-liquidity pools
- Split large orders into smaller chunks
- Use limit orders when possible
- Avoid trading during high volatility
- Consider MEV protection services