Although Dex trading is convenient and easy to use, some users do not understand its operation principle, and it is easy to cause trading losses in some special cases. Especially when the price of some currencies with small market capitalization changes too much, or when the slippage is not set properly, it is very likely that tens of thousands of USDT will be lost during the transaction.
In order to help users better use BitKeepSwap (including other DEXs), we specifically tell you about slippage and price changes that need to be paid attention to when trading DEXs.
What is Slippage
Slippage is when the transaction price is different from the expected price at the time of placing the order, usually due to price changes from the time the order is placed to the time of the transaction. For example, suppose you place a buy order for Ethereum on a DEX, and of course you want it to be executed at the price you selected.
But when you execute the trade, the final price you get is higher or lower than the price you selected when placing the order, which is slippage. If the buy price is higher than the price at which you placed the order, this is a negative slippage and the transaction fee is higher than expected. Positive slippage is when the buying price is lower than the price when the order was placed. Sell orders are the exact opposite.
Slippage is one of the inevitable factors that affect trading. For example, your expected purchase price is $100.10, but due to rapid price fluctuations and insufficient orders for a single price, your actual transaction price may be $100.20, and the $0.10 in between is what is known as slippage.
Slippage is a frequent occurrence in the cryptocurrency market, especially in DEXs. The main reason is the low trading volume, low liquidity, and huge price volatility of cryptocurrency assets. The more slippage you experience, the more money you lose. No one invests to lose money, and you certainly don’t want to lose money.
How to flexibly deal with slippage
We cannot completely avoid slippage, but we can reduce the risk of slippage and minimize losses. First, only trade on platforms with good liquidity and well-established infrastructure, and BitKeep Swap complies with this standard. In addition, do not trade this currency under high volatility, to ensure that there will be no delays in the network, etc. The best way is to try to choose a currency with high transaction volume and high liquidity. (That is to say, the smaller the market value, the less active the trading of small currencies, the easier it is to have negative slippage and increase transaction costs)
Second, you can choose small trades that are easier to close, rather than placing a large order all at once. If your order exceeds the existing liquidity, DEX cannot match the transaction. If a large order is decomposed into several small orders, it is more likely to be filled, and there will be no shortage of liquidity.
How to Set Slippage Range in BitKeep Swap
Slippage cannot be truly avoided, nor can the extent of slippage be predicted. However, you can test by manually setting the slippage range when you trade. The smaller the slippage range, the less the transaction fee will be when the order is placed. (However, the range of slippage cannot be infinitely reduced, which will hinder the transaction)
1) Open BitKeep Swap, enter the currency and quantity to be exchanged, and the Slippage column will be displayed below;
2) Click the setting symbol next to [Auto], and modify the slippage range in the pop-up window. The minimum value here can only be 1%. After setting, check again. The Slippage column has been changed to [1%]; the slippage range has been changed. After that, you can continue trading.
I also remind everyone here that if the slippage range has been set, it is still possible that the currency price fluctuates too much and causes losses due to issues such as the DEX liquidity pool or the transaction depth of the currency. It is best to trade in small amounts first. main.