Slippage Tolerance
This parameter is the maximum allowable price difference between the initial trading price and the final execution price.
This is a condition that users can apply to market orders, which will limit the maximum possible divergence between the price that it was initially deployed at versus its execution price.
The Slippage Tolerance has priority over almost any other condition present in the order, the applicable range is based on the initial price of the first asset execution filled by the order.
Slippage Tolerance is primarily applied to limit potential execution inefficiencies owing to volatile market conditions, or thin order books. On Axo, the unfilled portion of a market order using Slippage Tolerance behaves as a limit order at max slippage price.
How it is used
James wants to use a market order to purchase an asset at $100 each. However, due to the volatility inherent in the crypto market, he adjusts a Slippage Tolerance threshold of 5%. In other words, even if the trading price rises from the initial $100, the market order will only fill at the best possible price up to but not surpassing $105.
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