Skip to main content

How Does ‘Market Depth’ Mitigate the Effect of Slippage?

Market depth, which is the volume of buy and sell orders at various price levels, mitigates slippage by providing sufficient liquidity to absorb large orders. When a large hedge is executed, a deep market ensures that the order is filled without having to move far from the best price, thus minimizing the difference between the expected and actual execution price.

How Does an exchange’S’matching Engine’ Process Different Types of Orders?
What Is the “Best Execution” Obligation and How Does It Relate to Preventing Front-Running?
What Is an “Order Book” and How Does Its Depth Relate to Market Liquidity?
What Is ‘Slippage’ and How Does Deep Liquidity Mitigate Its Impact on Large Cryptocurrency Trades?