What Is ‘Slippage’ and How Is It Magnified by the Wider Spreads Found in Illiquid Altcoin Markets?

Slippage is the difference between the expected price of a trade and the actual execution price. In illiquid altcoin markets, the wide bid-offer spread indicates a shallow order book.

A large market order will consume all available limit orders at the best price, then execute against subsequent orders at progressively worse prices deeper in the book, resulting in significantly magnified slippage that compounds the high transaction cost of the wide spread.