Slippage

Let’s start with an example: you intended to open a trade at a certain price, but it was executed at a different — and much worse — one. Sounds familiar, doesn’t it? For traders with experience, this kind of market behavior during order execution is nothing unusual. But for a beginner, it can be confusing (and they’ll likely start sending angry messages to their broker and complaining on forums about being “scammed”).

So what actually happened? In reality, this was slippage — a common event and, moreover, a completely natural occurrence in real markets (stocks, futures, Forex ECN, etc.).

clusterdelta
clusterdelta

What Is Slippage

Slippage is the difference between the price a trader intended to enter a trade at and the price at which the trade was actually executed.

For example, the ask quote for EUR/USD might be 1.13339, and you place a Buy order, but the trade is executed at 1.13354 — 15 pips worse.

Conversely, the bid quote for EUR/USD might be 1.13308, and you place a Sell order, which is executed at 1.13319 — 11 pips better.

As you can see, slippage can be negative, working against the trader’s intended position, or positive, moving in favor of the order.

Slippage can affect not only market orders but also pending stop orders, since a stop order turns into a market order at the moment it is triggered.

Why It Happens

Slippage happens because your order isn’t the first in line at the price you requested. At the moment you submit it, dozens, hundreds, or even thousands of other orders are being processed at the same price. There aren’t enough counterparties to fill everyone at that price, so the execution price changes. Orders that weren’t filled at the original price are then executed at the new price. This all happens very quickly, in just fractions of a second.

Let’s imagine a real-life scenario. Suppose you go to a farmers’ market to buy potatoes. The first seller charges $1, the second $1.10, and the third $1.20. You intend to buy potatoes at $1 and join the line at the first seller. Suddenly, the first seller runs out of potatoes. You are forced to move to the second seller’s line at $1.10, but the potatoes run out there as well. You then move to the third seller at $1.20. Finally, only at the third seller do you get your potatoes.

In other words, you wanted to buy at $1 but ended up paying $1.20 — this is how slippage works.

How to Protect Yourself from Slippage

As you’ve understood from this article, slippage is an unpleasant phenomenon that a trader has little control over. It’s impossible to completely eliminate it from trading, but it can certainly be minimized.

How to reduce slippage:

Comments

BXNGop
BXNGop 2025-11-22 10:37:40 #
Slippage is unpleasant, and the higher the volatility, the more likely it is to occur. Try to open trades in a calm market. The article correctly states that slippage is a real market factor — you shouldn’t try to avoid it completely, but you should aim to minimize it.
Leave a Comment
Enter the characters:
captcha

f4y
f4y