Price impact

Price impact is an expression used to describe the correlation between an incoming order and the price change of the underlying asset caused by the trade.

Buy trades push the price of the asset up, while sell trades do the opposite. The degree of price change as a result of trading largely depends on the liquidity of the affected trading pair. More liquid trading pairs will have less of an impact on price than pairs with lower trading volumes.

Traders, especially those who trade in markets with limited liquidity or make large trades, should be aware of the impact their trading has on the price of an asset. Their second buy will be more expensive on average than their first because of their market power.

During each of your swaps, you can see the impact of the loss on the price of the token.

In order to avoid a sudden change in the price of the current when making your swap, there is a slippage tolerance parameter that allows you to set the maximum possible change in price and does not allow a transaction to be executed if this percentage is exceeded.

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