What Is Slippage in Prediction Markets?
Mike Goodpaster Last Verified
23/06/2026
Slippage is the difference between the price you expected to pay for a contract and the price you actually paid. It happens when there are not enough orders at your target price to fill your entire trade, so part of your order fills at worse prices further along the order book. The thinner the market, the larger the gap between what you see and what you get.
This guide explains how slippage works on prediction market platforms, what causes it, how to measure it, and the practical steps that reduce it. The examples use Kalshi and Polymarket, but the mechanics apply across any platform running a central limit order book.
How an Order Book Works
Before slippage makes sense, it helps to understand how prices are set on a prediction market exchange. Platforms like Kalshi and Polymarket run a central limit order book (CLOB). The order book is a live list of every open buy and sell order in the market, sorted by price.
On the buy side, traders post bids: the highest price they are willing to pay for a Yes contract. On the sell side, traders post asks: the lowest price they are willing to accept to sell. The gap between the best bid and the best ask is the spread. When a new order arrives that matches an existing order, those two orders fill against each other and the trade executes.
The price displayed on a market page is typically the mid-point between the best bid and the best ask. It is not necessarily the price you will pay. If you place a market order, you fill against whatever orders are available, starting from the best ask and working upward until your order is fully filled. If there is not enough volume at the best ask, your order spills over into the next price level, and the next, until it is complete. That is slippage.
A Worked Example
You want to buy 500 Yes contracts on a Kalshi market. The displayed price is $0.60. The order book looks like this:
| Ask price | Contracts available | Cumulative contracts |
|---|---|---|
| $0.61 | 200 | 200 |
| $0.62 | 150 | 350 |
| $0.63 | 100 | 450 |
| $0.65 | 150 | 600 |
Your 500-contract market order fills like this: 200 contracts at $0.61, 150 at $0.62, 100 at $0.63, and 50 at $0.65. Your average fill price is $0.623. You expected to pay $0.60 based on the displayed mid-price. The $0.023 difference per contract across 500 contracts is $11.50 in slippage, on top of any trading fee.
That is a direct cost that does not show up as a line-item fee. It simply reduces the USDC or dollars you receive when the contract resolves, whether you hold to settlement or sell early.
What Causes Slippage?
Three factors drive how much slippage you experience on any given trade.
- Order size relative to available liquidity. Small orders in deep markets almost never slip. A 10-contract order in a market with 50,000 contracts of depth at the best ask fills cleanly. The same order in a market with 20 contracts at the best ask moves the price immediately. The larger your order relative to the available depth, the more it spills into worse price levels.
- Market liquidity. High-volume markets like Bitcoin price thresholds, US presidential elections, and major sports championships tend to have deep order books and tight spreads. Niche markets, newly opened contracts, and low-volume events often have thin books where even modest orders cause meaningful slippage.
- Market volatility. During fast-moving periods, existing limit orders get pulled or filled quickly as traders react to news. The book can thin out in seconds around a Federal Reserve announcement, a major injury report, or an unexpected election development. Placing a market order during a volatile spike dramatically increases the chance of a bad fill.
Slippage vs the Spread
These two costs are related but not the same. The spread is the gap between the best bid and best ask at a single moment in time. It is the minimum cost of entering and immediately exiting a position. Slippage is what happens when your order is too large to fill entirely at the best ask, causing the average fill price to be worse than the mid-price.
In liquid markets the spread is narrow, often one or two cents, and slippage on reasonable order sizes is negligible. In thin markets the spread can be five to ten cents or more, and slippage compounds on top of that. Both the spread and slippage are invisible in the sense that they are not listed as fees, but they are real costs of execution that reduce your returns.
| Spread cost | Slippage | |
|---|---|---|
| What it is | Gap between best bid and best ask | Difference between expected and actual fill price |
| When it applies | Every trade | When order size exceeds available depth at best price |
| Who pays it | Takers (market orders) | Takers with large orders in thin markets |
| How to reduce it | Trade liquid markets | Use limit orders, trade in smaller sizes |
Slippage on Polymarket vs Kalshi
Both platforms run a CLOB, so slippage works the same way mechanically. The practical difference is in where liquidity concentrates.
On Kalshi, US sports markets, macro data markets (Fed rate decisions, CPI prints), and major domestic political markets tend to be the deepest. On Polymarket, global political markets, crypto price contracts, and international events carry the deepest books, reflecting the platform's longer history in those categories. Placing a large order in a category where the other platform has more depth typically results in worse slippage, regardless of which you use.
Polymarket US also introduced a 0.08% conversion slippage on the pUSD-to-USDC swap that happens when you withdraw, which is a fixed cost rather than order-book slippage, but worth knowing about. For a direct platform comparison, see our Kalshi versus Polymarket guide.
How to Reduce Slippage
Most slippage is avoidable with a few straightforward habits.
Use limit orders instead of market orders
A limit order specifies the maximum price you are willing to pay. If the available depth at your price is insufficient to fill the whole order, the unfilled portion sits on the book as a maker order rather than chasing worse prices. On Polymarket, maker orders earn a rebate. On Kalshi, they pay a lower fee than taker orders. Limit orders cost you nothing in terms of slippage and often save on fees at the same time. The trade-off is that your order may not fill immediately or at all if the market moves away from your price.
Check the order book before placing a large trade
Both platforms display the full order book. Before entering a significant position, look at the depth at and around the best ask. If there are only 100 contracts available before the price jumps by two or three cents, a 500-contract market order is going to cost you.
Split large orders
Rather than placing one 1,000-contract market order, splitting it into smaller chunks over time allows the book to replenish between fills. In active markets, new limit orders arrive continuously. Patience reduces both slippage and the market impact of a large trade.
Avoid trading around major news releases
Order books thin dramatically in the minutes before and after a Federal Reserve announcement, a major election development, or an unexpected sports news item. The spread widens, existing limit orders are pulled, and market orders fill at whatever happens to be available. If you do not need to trade in that window, waiting a few minutes for the book to stabilize is almost always worth it.
Trade liquid markets for large positions
If you want to take a meaningful position, high-volume markets with consistent order book depth are the right venue. Our overview of sports prediction markets covers one of the highest-liquidity categories on both platforms.
Slippage Tolerance Settings
Some prediction market interfaces let you set a slippage tolerance before placing a market order. This is a maximum acceptable deviation from the quoted price. If the actual fill price would exceed your tolerance, the order is cancelled or paused rather than filling at a worse price than you intended.
If a slippage tolerance setting is available, using it is worth doing for any order larger than a few hundred dollars. Setting it to one or two cents above the current mid-price gives the order room to fill while capping the downside. Leaving it at the default maximum means the platform will fill your entire order regardless of how far the price moves against you.
The Bottom Line on Slippage
Slippage is not a fee, but it functions like one. It is the hidden cost of executing a large order in a thin market. On small orders in liquid markets it is negligible. On large orders in thin markets it can meaningfully reduce your returns. The practical response is simple: use limit orders, check the book before trading, split large positions, and avoid volatile windows around major news releases.
For a grounding in how prediction market contracts work more broadly, including pricing, order types, and settlement, see our guide on how event contracts are structured. For a deeper look at how fees interact with slippage across platforms, see our prediction markets versus sportsbooks guide.
Slippage FAQ
What is slippage in prediction markets?
Slippage is the difference between the price displayed on a market and the average price you actually pay when your order fills. It happens when your order is larger than the available volume at the best price, causing it to fill across multiple price levels at progressively worse rates.
Is slippage the same as a trading fee?
No. Trading fees are charged by the platform and shown explicitly. Slippage is an execution cost that comes from order book dynamics. Both reduce your net return, but they arise from different sources. In liquid markets with small orders, slippage is negligible. In thin markets with large orders, it can exceed the trading fee.
How do I avoid slippage on Kalshi and Polymarket?
The most effective approach is using limit orders rather than market orders. A limit order caps the price you are willing to pay. If the book cannot fill your order at that price, the remainder sits as a maker order rather than chasing worse prices. Checking the order book depth before placing a large trade and splitting large orders into smaller chunks also help.
When is slippage worst?
Slippage is highest in thin markets (low volume, wide spreads), around major news releases when order books temporarily empty out, and with large orders relative to available depth. Niche or newly launched markets tend to have the most slippage risk.
Does slippage affect limit orders?
No. A limit order only fills at your specified price or better. If the market cannot fill your entire order at that price, the unfilled portion stays on the book rather than slipping to a worse price. The trade-off is that your order might not fill at all if the market moves away from your limit.
What is a reasonable amount of slippage to accept?
In deep liquid markets, one to two cents per contract on a mid-priced contract is normal and acceptable. In thinner markets, five cents or more per contract is possible and worth avoiding by using limit orders. As a rough guide, if the order book shows fewer contracts than your intended trade size at the best ask, expect meaningful slippage on a market order.
