Managing Price Movement: A Guide to Slippage Tolerance in Trading

When placing market orders, traders often face an unpredictable challenge: the price can shift between the time you initiate a trade and when it actually executes. Slippage tolerance is a powerful tool designed to help you navigate this volatility by setting acceptable price ranges for your orders. This feature is available across Spot, Spot Margin, and Futures trading, giving you greater control over your trading outcomes.

What is Slippage Tolerance and Why Traders Need It

Slippage tolerance allows you to define the maximum price deviation you’re willing to accept when executing a market order—either as a fixed amount or a percentage. By establishing these boundaries upfront, your order will only be executed within your specified price range, making your trades far more predictable and efficient. Rather than accepting whatever price the market offers at execution time, slippage tolerance puts you in control.

This feature addresses a common pain point in trading: market orders executing at unfavorable prices, particularly during volatile market conditions or when trading low-liquidity assets. By using slippage tolerance, you can effectively guard against sudden price swings while maintaining the speed advantage of market orders over traditional limit orders.

Key Benefits of Setting Slippage Tolerance

Setting up slippage tolerance offers several advantages that enhance your trading experience:

Improved Execution Quality: The feature enables smoother market order execution while minimizing unwanted price deviation, especially when trading Futures contracts with limited liquidity. This ensures you get closer to your intended entry or exit price.

Enhanced Speed with Price Protection: Slippage tolerance provides a superior alternative to traditional limit taker orders based on Ask1 and Bid1 prices, allowing you to execute trades faster while still maintaining price boundaries. You get the best of both worlds—execution speed and price control.

Safeguarding Against Volatility: Market orders typically expose traders to extreme price spikes and dips. Slippage tolerance acts as a protective mechanism, preventing your order from executing at prices far removed from current market levels, which is especially critical during sudden market movements.

Understanding Slippage Tolerance Configuration

Slippage tolerance operates in two distinct modes, giving you flexibility based on your trading style:

When Slippage Tolerance is Disabled

Without slippage tolerance active, your market order functions as a standard market order with no restrictions whatsoever. Your trade executes immediately at whatever price the market offers, regardless of how far that price has moved since you initiated the order. This provides maximum execution certainty but introduces maximum price uncertainty.

When Slippage Tolerance is Enabled

Activating slippage tolerance transforms your market order into a hybrid order that behaves like a limit order. Your trade will only execute if the price remains within your specified tolerance range. This dual-mode functionality gives you unprecedented control over your trading parameters.

You have two methods for setting your slippage tolerance: by a fixed amount or by a percentage of the current market price.

Setting by Fixed Amount

With this method, you specify an exact price deviation from the Ask1 price (for buy orders) or Bid1 price (for sell orders). The formulas are straightforward:

For Buy Orders: Limit Price = Ask1 + {amount}

For Sell Orders: Limit Price = Bid1 − {amount}

Consider this practical example using ETH/USDT. Suppose the Ask1 price is 2,100 USDT and Bid1 is 2,000 USDT. If you set a fixed slippage tolerance of 0.1 USDT:

• Your buy order limit price becomes 2,100.1 USDT (2,100 + 0.1)
• Your sell order limit price becomes 1,999.9 USDT (2,000 − 0.1)

This means buy orders execute only if the market price is at or below 2,100.1 USDT, while sell orders execute only if the market price is at or above 1,999.9 USDT. Any portion of your order exceeding this range is automatically canceled.

Setting by Percentage

Percentage-based slippage tolerance calculates the deviation as a percentage of Ask1 (buy orders) or Bid1 (sell orders) prices:

For Buy Orders: Limit Price = Ask1 × (1 + {percentage}%)

For Sell Orders: Limit Price = Bid1 × (1 − {percentage}%)

Using the same ETH/USDT example with a 0.5% slippage tolerance:

• Your buy order limit price becomes 2,110.5 USDT [2,100 × (1 + 0.5%)]
• Your sell order limit price becomes 1,990 USDT [2,000 × (1 − 0.5%)]

A buy order executes only if the market price is 2,110.5 USDT or lower, while a sell order executes only if the market price is 1,990 USDT or higher.

Important Considerations:

When setting slippage tolerance by amount, the value is always denominated in your settlement currency. Additionally, for BTC and ETH specifically, slippage tolerance can only be configured by fixed amount, not by percentage. This restriction reflects the unique characteristics of these major cryptocurrencies and their trading dynamics.

Step-by-Step Guide to Implementing Slippage Tolerance

Setting up slippage tolerance on your market orders is a straightforward three-step process:

Step 1: Access the Trading Interface and Select Your Pair

Navigate to the trading page and choose your desired trading pair. On the right panel, select your trading direction (buy or sell), then click the Market order type. Enter your desired order value or quantity as you normally would for any market order.

Step 2: Activate and Configure Slippage Tolerance

Check the Slippage Tolerance checkbox to enable the feature. Click the dropdown menu to toggle between By Amount and By Percentage depending on your preference. Once you’ve set your tolerance level, the interface displays the market depth analysis and provides an estimate of whether your order is expected to execute completely within your specified range.

Step 3: Review and Confirm Your Order

Click Buy or Sell to proceed. A confirmation popup appears showing all order details. Review the information carefully and click Buy or Sell again to finalize your market order with slippage tolerance. Your order is now live and protected by your specified price boundaries.

Monitoring and Tracking Your Slippage Tolerance Settings

After placing orders with slippage tolerance, you can easily review and monitor them through two convenient methods:

On the trading page, locate the Order History section at the bottom. Hover your cursor over any order to view its associated slippage tolerance settings. Alternatively, click Orders in the top-right navigation bar to access your complete order history. Again, hovering over individual orders reveals their slippage tolerance configuration.

The system automatically retains your slippage tolerance preferences, applying them automatically the next time you visit the trading page. This means your preferred settings persist without requiring reconfiguration.

Important Limitations:

Slippage tolerance is disabled by default, providing a conservative starting point for new users. The feature currently has some restrictions worth noting: it is not supported for OCO orders, Conditional orders, or Trailing Stop orders. However, for Futures traders, you have an additional application—you can enable slippage tolerance for Market Close orders and set your slippage tolerance using either percentage or fixed amount methods, just as you would for standard market orders.

Understanding and effectively implementing slippage tolerance transforms your approach to market order execution, providing the precision and control necessary for confident trading across varying market conditions.