What Is a ‘Price Tolerance’ Setting and How Does It Manage Slippage Risk?

Price tolerance, also known as maximum deviation, is a user-defined setting, particularly common on DEXs and some centralized platforms, that specifies the maximum percentage of negative slippage a trader is willing to accept for a trade. If the actual execution price falls outside this acceptable range, the order is automatically cancelled or reverted.

This acts as a safety mechanism to protect the trader from catastrophic negative slippage in volatile or low-liquidity conditions.