# Slippage Explained
Slippage is the difference between the price a trader expects and the price they actually receive when a transaction is executed.
## Why Does Slippage Happen?
Slippage commonly happens because prices can change between the time a trade is submitted and the time it is confirmed.
In decentralized exchanges, large trades can also move the price because of limited liquidity in a pool.
## Simple Example
Suppose a trader expects to swap 1 ETH for 3,000 USDC.
If the trade executes at 2,970 USDC because the price moved during the transaction, the difference is slippage.
## Slippage Tolerance
Slippage tolerance is the maximum price difference a trader is willing to accept for a swap.
A lower tolerance can protect against unexpected price changes, but the transaction may fail if the market moves too much.
A higher tolerance makes execution more likely, but it can result in receiving a less favorable price.
## Key Takeaway
Slippage is an important concept in DeFi because it affects the final amount a trader receives.
Understanding slippage and setting an appropriate tolerance can help users make more informed trading decisions.