What should small traders know about slippage and order types on exchanges?

Slippage hurts during fast moves; I stick to limit orders, small sizes, and always test with paper trades before live money.

Slippage bites when you trade in thin markets. I learned it the hard way buying a tiny-cap token with a market order; the book looked deep, then a burst of orders moved price and I paid 2, 3% worse than quoted. Selling in a fast move did the same.

What to do as a small trader:
- Use limit orders to lock price. For buys, set a limit price near the current ask or a notch above to improve fill chances without paying more than you’re willing. For sells, set a limit near the current bid so you don’t dump at a too-low price.
- If you need immediacy, accept some slippage with a market order but size down. Break big trades into smaller chunks to avoid moving the price.
- Watch depth and spreads before you trade. Thin books mean big moves on small size.
- Consider order types: IOC or FOK can force fills or cancel if not immediate. Post-only helps you avoid taker fees, but may not fill in fast markets.
- On DEXes, set a sane slippage tolerance (0.5, 1% is common; higher for illiquid tokens but you’ll pay in price impact).
- Test with small amounts, then scale up only after you’re comfortable with the results.

Slippage is the price movement between when you place an order and when it fills. In thin liquidity or fast moves, market orders get you worse fills. I learned this the hard way during a late-night dump: my market buy landed far from the quote. Since then I use limit orders with a cushion and watch the book. Before trading, check the spread and depth; if the book is thin, break orders into 2, 3 pieces or skip it. For buys, set a limit just above the current ask; for sells, just below the bid. Stop-limits help cap slippage on breaks, but can miss fills on gaps. Favor limit (maker) orders to reduce market impact and fees.