How Does the Concept of ‘Slippage’ Affect Trading on a DEX?

Slippage is the difference between the expected price of a trade and the price at which the trade is actually executed. On a DEX, especially an AMM, low liquidity or a large order can cause significant slippage.

This can result in a trader's position being opened or closed at a much worse price than anticipated, negatively impacting their PnL.