What is acceptable slippage: a complete guide to managing sliding prices

Permissible slippage is a feature that gives you full control over the maximum price deviation when placing market orders. Instead of accepting any available price, you set a permissible range within which you want your order to be executed. This acts as a buffer between expectations and market reality, providing more predictable and manageable trades. The feature is available for spot trading, spot margin trading, and futures contracts on the Gate platform.

Understanding the concept of permissible slippage

When you place a market order without restrictions, there is a risk that the price will change significantly between the order placement and execution. This is especially relevant in volatile markets or when trading assets with low liquidity. Permissible slippage solves this problem by allowing you to set the maximum acceptable deviation from the current market quote.

The system ensures that your order will only be executed if the market price remains within your set limits. Any part of the order that exceeds these boundaries is automatically canceled. Thus, you get a reliable tool to protect against unexpected price jumps.

How it works: from theory to practice

Slippage modes

When permissible slippage is disabled

A standard market order executes without any restrictions. The system places your order at the available Ask1 price for buying or Bid1 for selling, regardless of how much these quotes differ from the price at the time of placement. This can lead to unexpected slippage in rapidly changing markets.

When permissible slippage is enabled

A market order begins to function as a protected limit order. It executes only if the price is within your set range. You can set thresholds in two ways: as a fixed amount or as a percentage of the current quote.

Setting slippage by amount

This method specifies an absolute deviation value in the quote currency:

For buy orders: Limit price = Ask1 + {amount}
For sell orders: Limit price = Bid1 − {amount}

For example, with ETH/USDT pair. The current Ask1 quote is 2100 USDT (seller’s price), and Bid1 is 2000 USDT (buyer’s price). If you set permissible slippage to 0.1 USDT:

• Your buy order will be executed at a price of 2100.1 USDT or lower (2100 + 0.1)
• Your sell order will be executed at a price of 1999.9 USDT or higher (2000 − 0.1)

If the market price moves outside these limits, the order is not executed, and the remaining part is canceled.

Setting slippage by percentage

This method uses a percentage of the current quote, which is especially useful in volatile markets:

For buy orders: Limit price = Ask1 × (1 + {percentage}%)
For sell orders: Limit price = Bid1 × (1 − {percentage}%)

Using 0.5% slippage on the same ETH/USDT example:

• Buy limit price = 2100 × 1.005 = 2110.5 USDT
• Sell limit price = 2000 × 0.995 = 1990 USDT

The percentage method is more adaptive, automatically scaling depending on the asset’s price level.

Benefits of using permissible slippage in various trading scenarios

Smooth execution in low liquidity conditions

Permissible slippage is especially valuable when trading futures contracts with limited liquidity. Instead of risking execution at extreme prices, you set a reasonable range that allows your order to be filled fairly and reliably.

Alternative to limit orders with quick execution

Traditional limit orders based on Ask1 and Bid1 quotes are slow—they may not fill if the market moves quickly. Permissible slippage combines the advantages of market orders (fast execution) with the price control of limit orders.

Protection against sharp price fluctuations

In volatile markets, a market order can lead to significant deviation from the expected price. Permissible slippage acts as a safety cushion, preventing execution at unacceptable prices during sudden movements.

Step-by-step guide: placing and managing orders

Placing a market order with permissible slippage

Step 1 — Choose trading pair and direction

Go to the trading page on the platform and select your desired pair (e.g., ETH/USDT). On the right, specify buy or sell. Click on Market and enter either the amount in currency or the quantity of the asset.

Step 2 — Enable the slippage feature

Check the box next to permissible slippage. In the dropdown menu, choose between Amount or Percentage mode. After setting the value, the system will display the current market depth and the likelihood of full order execution.

Step 3 — Confirm and execute

Click Buy or Sell. In the confirmation window, review all order details. Click again to finalize. The order with permissible slippage is successfully placed.

Important notes on execution guarantees

Full execution depends on market depth and your order size. If liquidity is limited, only the portion within the set slippage will be filled, and the rest will be canceled. For BTC and ETH, permissible slippage can only be set by amount, not percentage.

Monitoring and control: viewing your slippage settings

Viewing order history

At the bottom of the trading page, find the Order History section. Hover over any order to see your set slippage parameters. Alternatively, click Orders in the top right corner of the navigation panel to open the full history.

Automatic saving of settings

By default, permissible slippage is disabled. However, the system automatically remembers your last settings and applies them on your next visit to the trading page. This simplifies your workflow if you regularly use the same parameters.

Specifics for futures trading

When closing futures positions, you can also enable permissible slippage. Simply set the percentage or amount of slippage just like when opening a position.

Limitations and features

Permissible slippage does not work with conditional orders, OCO (One-Cancels-Other) orders, or trailing stop orders. These more complex order types require special handling and are incompatible with the slippage mechanism. Keep this in mind when planning your trading strategy.

When setting slippage by amount, the value is always expressed in the quote currency of the trading pair. This is important to remember when working with different pairs that have significantly different price levels.

Permissible slippage is a powerful tool for risk management and increasing the predictability of your trades. Whether protecting against unexpected slippage in volatile markets or ensuring fair execution with limited liquidity, this feature provides the confidence and control needed for effective trading.