What Is Slippage in Trading? Understand Slippage and How it Impacts Your Trades in 2026

Since prediction markets have started gaining the attention of traders, many newbies have asked questions like: What is slippage in trading? If you’re reading this, it means you’re also interested in knowing how it works.

Slippage refers to the difference between the price you expect when placing a trade and the price at which it is actually executed. In simple terms, your order may be filled at a slightly better or worse price than anticipated. This commonly occurs during periods of high market volatility, when prices can move rapidly between order placement and execution.

First things first – how does prediction trading work?

It is true that slippage can happen with any market. However, since this guide will be focused more on prediction market angle, let’s quickly explain how prediction trading works.

Prediction trading has something to do with buying and selling of Yes/No event-based contracts that are tied to real life possibilities like election results, sports events, crypto price movements, as well as economic indicators like inflation and unemployment rates.

Traders get to do these transactions on prediction markets like Kalshi, Polymarket, and the rest. In case you’re wondering: How does Kalshi work? The brand operates as a regulated exchange where traders can sign up and buy or sell event-based contracts.

So in essence, you just need to sign up for an account, make a deposit, and start trading on event-based contracts that you’re familiar with. Having said that, prediction trading works similarly to other types of trading, especially when it comes to pricing, as they are also not controlled centrally. Contract prices are usually influenced by the forces of demand and supply.

For context, prices of Yes or No contracts usually start at $0.1, depending on the prediction market. From there, the price can surge if many traders believe in that particular outcome. So, if you see the price of a contract at $0.7 per share, it means that about 70% of the market believes in that particular outcome.

A close look at slippage and how it can affect you positively or negatively

Even though we’ve briefly introduced it earlier, we don’t think it’s a bad idea to take a close look at it again. As we said, slippage is the difference between the expected price of a contract and the actual price at which your trade is executed.

In prediction markets, this can happen within seconds, especially when prices are moving quickly due to breaking news, sudden shifts in market sentiment, or low liquidity in a specific contract.

For instance, if you place a sell request at a contract price of $0.7 and you end up selling it at $0.71, the difference between the two prices is what we consider the slippage. Slippage can happen in two ways, therefore affecting both positively and negatively – we’ll be discussing this in the following section.

Types of slippage: Positive and negative

As expected, slippage comes in two types, including positive and negative slippage. The positive slippage happens when your trade is executed at a better price than expected.

For instance, if you place a buy “Yes” order at $0.60 but it gets filled at $0.58, you have successfully entered the trade at a discount, which offers you the chance to increase potential profits. On the flip side, negative slippage happens when your order is filled at a worse price than anticipated. If you place a sell order for your “Yes” contracts at $0.70 and it gets filled at $0.68 due to sharp price movements, then a negative slippage has affected the value of funds you’re supposed to get from the trade.

While both types of slippage are regularly experienced at financial markets, traders are always trying to minimize the negative side as much as possible since it directly affects their profitability.

Before going into some of the common causes of slippage in trading, let’s quickly explain how Polymarket works in simple terms. In case you don’t know, Polymarket works just like Kalshi. It is a prediction market where you can buy and sell “Yes” or “No” contracts that are tied to real life events and outcomes.

Common causes of slippage in trading

There are actually lots of reasons why slippage happens in trading, but for the purpose of this guide, we’ll be taking a close look at some of them:

Technical issues on prediction markets

Technical issues are one of the most common causes of slippage on prediction markets. These can include slow order processing, server delays, or temporary system outages, especially periods where large numbers of traders are actively buying and selling.

For instance, during major events like elections or big sports matches, thousands of traders may try to place orders at the same time. These actions can overload the system, therefore leading to delays in transaction processes, which can lead to orders being filled at different prices.

High market volatility

Market volatility is another major factor that causes slippage in trading. When there's breaking news or sudden changes in market sentiment, prices can move very fast within seconds. In such situations, even a small delay in execution can lead to noticeable slippage, especially if many traders are trying to enter or exit a particular position.

Low liquidity in the market

Slippage can also happen if there’s low liquidity in a market. If there are not enough buyers and sellers at your desired price, your order may be matched at the next available price level, which can be higher or lower than expected. This is very popular in less popular prediction contracts. Also, in a market with low liquidity, any new sell or buy order can affect price positively or negatively in a matter of seconds, therefore leading to slippage.

Use of market orders instead of limits orders

Lastly, the type of order you use can also affect slippage. Market orders are usually executed instantly at the best available price, which makes them more likely to experience slippage during fast market movements. On the other hand, limit orders allow you to set your preferred price, therefore helping you to avoid unexpected execution prices.

Slippage vs spread: What’s their difference?

Slippage and spread are two trading terms that are often used interchangeably, even though they refer to different concepts and affect trades in different ways. Although we didn’t mention it while explaining prediction markets in the previous section of this guide, spread is the fixed difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). It is always visible before you place a trade, therefore literally representing the built-in cost of entering or exiting a position.

On the flip side, as mentioned, slippage happens when you already place trade. It is the difference between the price you expected and the price you actually get when the order is executed. Unlike spread, slippage is not guaranteed, since it only happens when there’s a sharp price movement. For a better understanding, we’ve differentiated the two terms using the following table:

Getting started with prediction market trading

Now that you have an idea of what slippage is, don’t you think you should give prediction trading a try? The best part is that if you’re ready, there are many sites that you can access for trading. Thankfully, the best ones have been listed on the banners of this page.

All you just have to do is tap any of the registration links plastered on this page to create an account. Another cool thing about our recommended prediction markets guides is that they are all licensed and regulated by the Commodity Futures Trading Commission (CFTC).

Once ready, you can follow the simple steps below. But before then, kindly note that for compliance reasons, you must be at least 18 years old to sign up for any of these reputable sites.

1. Sign up for an account

   To sign up for your account, tap any of the links on this page and wait for the registration page to load up. Once the form comes up, provide all the information required, including your name, email address, and home address. Once done, you’ll most probably need to verify your email address to proceed to the next step.

2. Verify your identity

   Most of the recommended prediction market will require you to complete identity verification before getting access to everything they offer. This is done for compliance reasons and to ensure that only real adults are allowed to sign up and trade. Thankfully, you can complete this process in a matter of minutes, regardless of your choice of prediction markets.

3. Fund your account

   Once your identity has been verified, you can proceed to adding funds to your account through any of the supported payment methods. Fortunately, most of them support popular methods like Apple Pay, debit/credit cards, bank transfers, and even Apple Pay.

4. Start trading

   Once your deposit reflects, you can head to the prediction market to start trading on your preferred real life outcomes. Thankfully, most of the markets cover crypto price movements, elections, culture, entertainment, and much more. This means there are more than enough possible outcomes to trade on.

Pros and cons of slippage in trading

From our explanations above, one thing is constant. Slippage can be both a blessing and a curse. Here are some of the pros and cons that we’ve noticed with it:

Pros and Cons

• Can result in better entry or exit price
• Can create opportunities during fast price movements
• Reflects real-time market conditions

• Can lead to unexpected losses

Final thoughts on slippage in trading: What every trader should know

At the end of the day, many traders may not understand what slippage really is or how much it can impact their trading balance. While it may seem like a small difference in price, it can significantly affect profitability either positively or negatively.

The good news, however, is that slippage is not something traders have to fear. Instead, it is a normal part of trading that comes with participating in fast moving markets. The most important thing is for you to understand why it happens and learn how to reduce its negative effect whenever possible.

Having said that, if you followed this guide from the top, chances are that you must have understood everything you need to know about slippage or how it works, especially when it comes to prediction trading. If that’s true, you should now have an idea of how to navigate your way around when you access a prediction market of your choice.

So, if you wish to give prediction trading a chance, you can sign up for any of the sites featured on the banners of this page. The best part is that they all feature streamlined registration processes, so you should be done in a matter of minutes.

Slippage in trading FAQs