Slippage
Slippage is the difference between the price you expected and the price you got, common in fast markets and on stop orders.
Slippage is the gap between the expected and actual fill price, common on market and stop orders in fast markets. It can go against you or in your favour.
Slippage is the difference between the price at which you expected an order to fill and the actual fill price. It happens when the market moves between order submission and execution, and it is most common on market orders and stop-losses during news, gaps and thin liquidity. Slippage can be negative (worse price) or positive (better price). It is a cost of fast markets, not evidence of a broker cheating, though requoting brokers can make it worse.
How It Works
- Fills execute at the next available price when the market moves first
- Worst on news spikes, gaps and low liquidity
- Stop-losses are the most slippage-prone orders because they enter the market
Trading Tips
Size positions smaller into scheduled news, when slippage is worst
Limit orders never slip against you - they fill at your price or better
Extreme repeated slippage on a broker that otherwise behaves is worth checking, but normal slippage is the market, not the broker
Slippage Example
Say you place a buy stop at 1.0900 ahead of a US jobs report. Price jumps straight from 1.0898 to 1.0912 with nothing traded between. Your fill lands at 1.0912, twelve pips worse, about $120 on a standard lot, and no broker owes you the gap.
How Traders Use Slippage
Expect slippage on every stop and market order around news, and shrink size into scheduled releases. If you need an exact price, use a limit order: it fills at your level or better, or not at all.
Related Terms
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