What is Slippage?
Slippage is the difference between the expected price of a trade and the price at which the trade is executed. It occurs when an order is filled at a different price than the one specified by the trader. Slippage can occur due to a number of factors, such as market volatility, liquidity, and order size. It can also occur due to technical issues with the trading platform or broker.
How to Handle Slippage on Bitfinex?
There are several ways to handle slippage when placing market orders on Bitfinex. The first is to use limit orders rather than market orders. Limit orders allow you to specify a maximum price at which you are willing to buy or sell a cryptocurrency. This ensures that your order will not be executed at a price higher than the one you specified.
Another option is to use the “Post-Only” order type. This order type ensures that your order will not be executed immediately, but will be placed on the order book and wait for a matching order from another trader. This reduces the risk of slippage, as your order will not be filled until a matching order appears on the order book.
Finally, you can use the “Fill or Kill” order type. This order type ensures that your order will be filled immediately, or it will be cancelled if it cannot be filled at the specified price. This can help to reduce the risk of slippage, as your order will not be filled at a price higher than the one you specified.
Conclusion
Slippage can be a major issue when trading cryptocurrencies, as it can lead to losses if not managed properly. Fortunately, there are several ways to handle slippage when placing market orders on Bitfinex. These include using limit orders, the “Post-Only” order type, and the “Fill or Kill” order type. By using these methods, traders can reduce the risk of slippage and ensure that their orders are filled at the prices they specify.