We can find, above, the location of the slippage controls in the Shrimpy application. They can be found on the page where you construct your "Automation". The reason it is located on this page is because these controls only apply to the individual automation strategy, allowing for more advanced control over each of your portfolio strategies.
Notice that this setting is hidden on the left side by default. You must select "Show more settings" in order to see these advanced settings.
Let's discuss what is slippage and how slippage happens before we dive into how Shrimpy implements this control.
This illustration shows the way open orders are placed on the order book. The left side being the bid orders and the right side being the ask orders. When trading, open orders are placed on either side of the spread, which is the space in the middle where no orders are placed. When an order is executed, that means the spread was crossed to take an open order on the other side of the spread.
When being a "taker", you are executing the order immediately and removing that order from the order book. If your order was large enough to consume the entire order at that price, that means the next available price will be worse than the previously purchased price. This movement is called slippage. As we continue to consume the order book and move the price further away from the original purchase price, the Shrimpy application tracks this as slippage.
So, if we have a max slippage percentage of 5% set, that means the Shrimpy application will only allow the price to drift 5% before we cease execution. The slippage is calculated from the first executed trade to the current trade that is being evaluated. That way we always know the original price at which we executed our first order and can compare that to the next price we will attempt to place an order.
In the Shrimpy application, limit orders are always used for trading. This means we don't place market orders. This allows us to control for how much slippage is experienced during a rebalance.
This feature is intended to act more as a safety than a way to actively control the slippage of your portfolio. As a result, we encourage utilizing max slippage values greater than 3%. A small max slippage can lead to incomplete rebalances since the market is extremely volatile.
Have questions, comments or concerns? Feel free to reach out to us via the blue "Support" button found in the bottom left corner of your Dashboard, or send an email to Support@Shrimpy.io.