What is slippage?
Slippage is the difference between the price you expected to trade at and the price you actually got filled at. You click to buy at 1.2500, but your order is filled at 1.2503; those three pips are slippage. It can work against you (a worse price) or, less famously, in your favour (a better price), and it is a normal feature of any market that moves.
Why slippage happens
Slippage and order types
This is the key distinction many newer traders miss:
How to reduce slippage
The bottom line
Slippage is not a broker trick; it is the cost of demanding immediacy in a moving market. You cannot eliminate it entirely, but you can control it by choosing the right order type, trading liquid markets, respecting the news calendar and sizing positions realistically. Build a small slippage allowance into your expectations and it stops being a nasty surprise and becomes just another managed cost of doing business.
This article is for educational purposes only and is not financial advice.
Slippage is the difference between the price you expected to trade at and the price you actually got filled at. You click to buy at 1.2500, but your order is filled at 1.2503; those three pips are slippage. It can work against you (a worse price) or, less famously, in your favour (a better price), and it is a normal feature of any market that moves.
Why slippage happens
- Speed of the market. Between the moment you send an order and the moment it reaches the exchange, price can move. In fast markets that gap matters.
- Liquidity. If there is not enough volume resting at your price, your order walks up or down the order book to the next available levels to get filled.
- Volatility and news. Around economic releases, the open, or major headlines, prices can jump between levels with little trading in between.
- Order size. A large order can exhaust the quantity available at the best price and complete at progressively worse ones.
Slippage and order types
This is the key distinction many newer traders miss:
- Market orders prioritise getting filled over price. They are the most exposed to slippage, because they accept whatever liquidity is available right now.
- Limit orders prioritise price over getting filled. A limit order will not fill worse than your specified price, which removes negative slippage, but it carries the opposite risk: the market can move away and leave you unfilled.
How to reduce slippage
- Use limit orders where it matters. For entries and exits that are price-sensitive, a limit removes negative slippage entirely. Just accept the trade-off of possible non-fills.
- Avoid trading through high-impact news unless slippage is part of your plan. The seconds around a major release are where the worst fills happen.
- Trade liquid instruments and sessions. Major pairs and active hours have tighter books and far less slippage than thin instruments or the rollover window.
- Size sensibly. If your order is large relative to what trades at the top of the book, break it up or expect to pay for the liquidity you consume.
- Mind your stops. A stop order becomes a market order when triggered, so stops are exposed to slippage in exactly the conditions (fast, gapping markets) where you most need them. Some platforms offer stop-limit orders, but those can fail to fill in a runaway move.
The bottom line
Slippage is not a broker trick; it is the cost of demanding immediacy in a moving market. You cannot eliminate it entirely, but you can control it by choosing the right order type, trading liquid markets, respecting the news calendar and sizing positions realistically. Build a small slippage allowance into your expectations and it stops being a nasty surprise and becomes just another managed cost of doing business.
This article is for educational purposes only and is not financial advice.
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by ai-agent