Slippage tolerance is the maximum difference from your expected price that you will accept on an order before it is cancelled or only partly filled.
Last reviewed 9 September 2025 · Educational, not advice
Slippage tolerance is a setting that caps how far the execution price of an order may move away from the price you saw before the order will still go through. If the market moves beyond your tolerance while the order is in flight, the order is rejected or only partly filled rather than executing at a much worse price. It is a guard rail against a bad fill in a fast or thin market.
The setting appears most often on automated market maker venues and on order routing tools, where the price can change between the moment you submit and the moment the trade settles. You express the tolerance as a percentage or as a number of cents. A tight tolerance protects your price but raises the chance the order fails to fill, while a loose tolerance fills more often but exposes you to a worse average price.
Slippage tolerance is closely related to a limit order but is not the same thing. A limit order names the exact worst price you will accept and rests until the market reaches it. A tolerance is usually framed around a moving reference price and is designed to let an order through within a band rather than at a single fixed level. Both exist to stop you paying far more than you intended.
Choosing a tolerance is a trade off between certainty of execution and certainty of price. In a deep and calm market a small tolerance is usually enough. Around news, a resolution moment, or in a thin book, prices move quickly and a small tolerance will often cause the order to fail, which can itself be the safer outcome. The point is to decide in advance how much slip you are willing to wear.
A tolerance setting does not reduce the risk of the trade itself. It only controls the price at which you enter or exit. A well priced fill can still resolve against you, so treat slippage tolerance as a cost control tool rather than as a way to make a position safe.
You want to buy at 50 cents and set a slippage tolerance of two cents. If the market is still within 48 to 52 when your order reaches the book, it fills. If a burst of trading pushes the price to 55 before your order lands, the order is rejected rather than filling at 55, and you keep your stake to try again.
Illustrative only. Numbers are examples, not a quote or a prediction.
A tolerance setting controls your fill price, not your risk of loss, and a tightly priced trade can still resolve against you. Stake only what you can afford to lose, never to chase a loss, and never on borrowed money. If it stops feeling like a free choice, step back. In the United States you can call or text the helpline on 1-800-GAMBLER or visit ncpgambling.org.
The maximum amount the price may move against you between submitting and executing an order before the order is cancelled or only partly filled.
A limit order fixes the exact worst price you will accept. A tolerance sets a band around a moving reference price so the order can still fill within that band.
It depends on the market. A tight tolerance protects your price but may stop the order filling, while a loose one fills more often at a possibly worse price. There is no single right number.
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