Price Impact
The amount a trade itself moves an asset's price, distinct from slippage, which also includes price movement from other market activity during execution.
Price impact is the amount a specific trade itself moves an asset's price, purely as a function of the trade's size relative to available liquidity — a larger trade against thinner liquidity produces greater price impact.
Price impact is a component of, but distinct from, slippage (see Kaavon's "Slippage" glossary definition): slippage is the total difference between expected and executed price, which includes both the trade's own price impact and any additional price movement from other market activity happening during execution.
Examples
- A large order placed against a thin order book or shallow liquidity pool produces significant price impact, even before accounting for any other market activity.
- Price impact is one component of total slippage, not a synonym for it — slippage also captures price movement from unrelated market activity during execution.
Learn more
Slippage
Read the Slippage glossary definition
OTC Desk
Read the OTC Desk glossary definition
Time-Weighted Average Price (TWAP)
Read the Time-Weighted Average Price (TWAP) glossary definition
Liquidity Depth
Read the Liquidity Depth glossary definition
DEX Aggregator
Read the DEX Aggregator glossary definition