The slippage limit for Market Orders is designed to help investors control the maximum acceptable price deviation when an order is executed, especially in conditions of high market volatility or low liquidity. This mechanism aims to reduce the risk of orders being filled at unfavorable prices while enhancing users’ ability to manage their trades proactively.
How It Works
When users enable the slippage limit option, the system converts the market order into a limit order, allowing execution only within the maximum price range specified by the user.
Accordingly, the order is permitted to execute only within the predefined price range. Any price beyond this range will not be accepted.
How the Limit Price Is Determined
The limit price of an order is calculated based on two factors:
- The Market Price (MP) at the time the order is placed
- The slippage tolerance selected by the user
Based on these two factors, the system determines the maximum allowable price range within which the order may be executed.
Order Execution and Handling When Slippage Is Exceeded
During the execution process:
- If sufficient liquidity is available within the allowed slippage range, the order will be executed immediately.
- If the order is only partially filled before reaching the slippage threshold, the filled portion will be retained, and the remaining portion will be canceled.
- If no suitable price exists within the allowed slippage range, the order will not be executed.
Example
Assume a user places a Sell order for Token A with the following conditions:
- Market Price (MP): 1,000
- Best Price (BP): 990
- Slippage limit: 0.1%
In this case, the lowest acceptable selling price is calculated as: 1,000 × (1 − 0.1%) = 999
Since the best available buy price in the market is only 990, which is lower than 999, the order will not be executed. The system will not sell at a price lower than the threshold specified by the user.
Important Notes
- The slippage limit does not guarantee that an order will be executed; it only ensures that the order will not be filled outside the specified price range.
- In highly volatile markets or low-liquidity conditions, an order may remain unfilled or be partially filled.
- This mechanism prioritizes price control over execution speed and may not be suitable for strategies that require immediate entry or exit.
- The Market Price is used as a reference price at the time the order is placed and does not guarantee the execution price.
- Users should carefully select an appropriate slippage tolerance based on market conditions and their trading strategy.
How to Set the Slippage Limit for Market Orders on the ONUS App
- Step 1: On the order placement interface, select a Market order and configure the order details (Long/Short, leverage, quantity, etc.).
- Step 2: Enable the Slippage Limit option.
- Step 3: Select the desired slippage tolerance.
- Step 4: Review the order details and confirm the order.