Slippage
What is Slippage in Trading?
Slippage is the difference between the price you expect to trade at and the price you actually get when the order fills. In plain terms, prices can move in the split-second between clicking “buy/sell” and execution, creating trading slippage. Slippage can be negative (worse price) or positive (better price).
Why Slippage Happens
- Volatility: Prices move quickly (news, session opens, session overlaps).
- Liquidity: Not enough orders at your price.
- Order type: Market and stop orders fill at the next available price.
- Size & speed: Large orders or slow connections can increase slippage in trading.
Slippage Example
You place a buy on EURUSD at 1.10201.
- If it fills at 1.10209, you got -0.00008 negative slippage (worse price).
- If it fills at 1.10195, you got +0.00006 positive slippage (better price). This is typical slippage in forex (also called Forex slippage) on fast moves in US Dollar, Euro, or Yen pairs.
Order Types and Slippage Risk
- Market order / Stop order: Highest chance of fill, price can slip.
- Limit order / Stop-limit: Controls price (“this price or better”), but may not fill if the market skips your level. This is the core of slippage trading decisions: choose between execution certainty and price control.
Slippage Calculation
- Buy order: Slippage = Fill price − Expected price.
- Sell order: Slippage = Expected price − Fill price.
Platforms may show this in pips/points or as a cash impact; handy for slippage rate reviews and what is slippage in trading analysis.
How to Reduce Slippage
- Use limit orders when price control matters.
- Avoid major news spikes if you don’t want gaps.
- Trade liquid hours (busier sessions often mean tighter pricing).
- Keep sizes reasonable and confirm your platform’s execution settings.
Other Glossary Terms
S
- Spread
A spread is the small difference between an asset’s buy (ask) and sell (bid) prices, showing the cost of opening a trade and how brokers make money.
- Stop Loss
A stop loss is a preset order that automatically closes your trade when the price moves against you, helping limit losses and protect your account through effective risk management.
- Stop Loss Limit
A stop-loss limit is an order that triggers a limit order once a set stop price is reached, letting traders control losses but not guaranteeing execution beyond the limit.
- Support Level
A support level is a price zone on a chart where a downtrend tends to pause or reverse as buying pressure increases, acting like a floor where traders expect prices to bounce.
- Swap
A swap, or rollover, is the credit or fee applied to a CFD position held overnight, reflecting interest-rate differences, financing costs, and broker adjustments.
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