How do I calculate price slippage as a percentage?
Asked 4 years ago
Good day everyone, this is the second time I exchanged BUSD for CAKE in PancakeSwap's liquidity pool only to get less than I bargained for in return. I intended to get 100 CAKE and exchanged 2018.3 BUSD for it, only to get 93 tokens. It's enough to be an annoyance. I then learned that I can adjust the slippage tolerance, but I don't know how much 0.8% in slippage would be. How do I work this out?
Josiah Makori
Tuesday, September 20, 2022
Slippage is the difference between the expected price of a trade (bid price) and the price at which the trade was executed (ask price). It’s caused by several factors, such as liquidity, market volatility, and spreads. For instance, if there are two buyers and three sellers in a market depth, then this implies that none of what is offered by the traders can be filled immediately. As such, the trades are executed at a price higher than what is being asked for on one side of the market depth and lower than what’s being bid on the opposite side.
When this occurs, it affects the profits traders make from their trades as they do not obtain what they expect when placing their orders. To calculate the price slippage as a percentage:
[(Bid Price – Ask Price) / Quantity] * 100%.
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