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Slippage is the difference between the initial entry point of an order and the average price after it has been fully executed. Slippage occurs when the execution of an order requires matching with several orders on an order book. The initiating trader will receive progressively worse prices as their orders move through the depth chart.

For example, if the best ask in a market was 5 bitcoin at $10,000 and the second best ask was 5 bitcoin at $10,002 then a market order to buy 10 bitcoin would execute with both of those asks. The buyer would buy 10 bitcoin for $100,010, resulting in a volume-weighted average price of $10,001 per bitcoin even though the initial ask was $10,000.

Slippage occurs when a trader places a large order. The effects of slippage will be worse in markets with lower liquidity. To avoid slippage a trader can use limit orders or can place the order as several smaller orders. However, both of these strategies result in slower execution.