Slippage

Slippage is when the market takes a step back, and you take two forward.

Slippage is the difference
between the price that you see on the screen,
and the price at which you are actually allowed into the trade.

The market is not one neat number.
It is a layered pie of orders.
Moreover, sometimes it is a pie
that someone already started eating before you.

• Your volume begins to eat liquidity
• The price starts to nervously move away
• The average entry price becomes less and less friendly

Mini action movie in numbers

You plan to open a long at 60 000.
Beautiful. Confident. According to the strategy.

But the market answers:
“Ha-ha, cute”.

• At the level there is only 100k liquidity
• Your order is 300k

As a result, you find yourself inside the position
with an average price around 60 250.

Congratulations.
You have just paid the invisible tax of the market.

Liquidity

Liquidity is the gravity of trading

Signals can be perfect.
Indicators can glow like a New Year tree.

But if liquidity is weak,
the market becomes similar to a trampoline.

High liquidity is an autobahn

• BTC
• ETH
• Top altcoins

✔️ Narrow spread
✔️ Calm execution
✔️ Fewer sudden “minus 20% during a coffee break”

Medium liquidity is city traffic jams

• Mid-cap alts
• Commodity futures

⚠️ You can go fast
⚠️ But sometimes you hit a hole

Low liquidity is an off-road rally

• New tokens
• Low-volume perpetuals

❗️ The order book looks like a student’s fridge, empty
❗️ Slippage becomes epic
❗️ Leverage turns into financial extreme

This is where the platform is important.

For example, Fybit is often perceived by traders
as that very lifeboat,
when the market begins to rock the boat.

Thanks to instant execution of orders
at the best available price,
slippage risks are noticeably reduced,
which means you can worry less
that the trade will turn into a thriller.

Leverage

Leverage is an amplifier of drama

Slippage is also multiplied by leverage.

• The market moved against you by only 1%
• Slippage added 0.6%
• Leverage is 20x

💥 The deposit gets a hit of about –32%

Moreover faster,
than you manage to write in the chat:
“Guys, is this a normal candle?”

Liquidation Cascades

Liquidation cascades are a domino effect on steroids

1. 1. A large order moves the price
   2. Liquidations are triggered
   3. The exchange closes positions with market orders
   4. Liquidity evaporates
   5. The price accelerates like a sports car without brakes

This is called:
liquidity cascade
or
liquidity vacuum

At such moments the market:

• Moves nonlinearly
• Gives slippage more generously than bonuses in ads
• Liquidates traders with a chain reaction

Panic is the most liquid asset on the planet.

How Professionals Survive

They do not jump into the market with the whole deposit at once.

Funds split positions and use algorithms:

• TWAP
• VWAP
• Iceberg execution

They choose the time when the market is “thick”.

• Intersection of European and American sessions
• Opening of the US stock market
• Peaks of derivatives volumes

They look into the order book like into an X-ray.

They analyze:

• Depth
• Bid-ask imbalance
• Liquidity clusters

And yes, they respect limit orders.

Sometimes it is better to miss a trade,
than to enter in such a way
that later you will have to explain to the deposit,
why you are no longer together.

Main Conclusion

Price risk = Liquidity risk

The price can go perfectly according to the plan.
But bad execution is able to destroy the whole edge of the strategy.

Professional logic:

1. First liquidity analysis
2. Then position size
3. Then leverage

And not the other way around.

Or you can immediately choose infrastructure
that reduces execution risks,
for example Fybit,
where technological execution speed
often becomes that very lifeline,
when the market suddenly turns
from a walk into a storm.