Slippage vs Price impact: what's the difference?
Both worsen your fill, but they come from different sources — and the fix for each is different.
The short version
Both worsen your fill, but they come from different sources — and the fix for each is different.
- Slippage: The gap between quoted and realized price, including movement from other traders.
- Price impact: The portion of that gap caused purely by your own trade size relative to liquidity.
Side by side
| Dimension | Slippage | Price impact |
|---|---|---|
| Cause | Market moving during your trade | Your size relative to pool depth |
| You control it by | Slippage tolerance setting | Reducing trade size |
| Worst on | Fast, volatile markets | Thin pools with big trades |
| Felt | Once, on the fill | Twice — entry pumps, exit dumps |
Which one should you care about?
Key idea — If your fills are bad on a thin pool, the fix is usually smaller size (price impact), not higher slippage tolerance — which only invites sandwiches.
Knowing the theory is great. Catching it live is better.
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