Slippage Protection

In prediction markets, liquidity can be fragmented. "Slippage" refers to the difference between the expected price of a trade and the price at which the trade is actually executed. PolyOrbit includes a robust protection mechanism to guard your capital against volatility.

The Mechanism

When you configure an Action Node (specifically a Buy or Sell order), you must define a Slippage Tolerance (default is usually 1% or 2%).

Before the Watchtower executes a trade, it performs a "Pre-Flight Check" against the current Order Book:

1. Price Calculation: The system calculates the average price required to fill your order size.

2. Comparison: It compares this price against your expected price plus your tolerance.

3. Decision:

   • Safe: If the current market price is within your limit, the trade executes.

   • Unsafe: If the price has moved unfavorably (e.g., a sudden spike makes the shares too expensive), the transaction is aborted.

Why It Matters

Without slippage protection, a large automated order could sweep through a thin order book, resulting in you buying shares at a much higher price than intended. This feature ensures that automation does not come at the cost of profitability.