 | What is the definition of Slippage?
Slippage is the difference between the expected price of executing a trade, and the actual price of execution of that trade. It can also be defined as the difference between the price of an asset a trader expects to be filled at, and the price he is actually filled at.
|  | TradersLaboratory decodes Slippage
Slippage occurs in al financial markets when there is increased volatility or when there are so many orders that a broker/dealer can handle at a time. This is a phenomenon associated with dealing desks. Slippage is associated with a change in spread. For instance, a trader may want to BUY the EURUSD at 1.3209/1.3212, with an expected spread of 3 pips. Slippage may cause him to be filled at 11.3252, in which case, the trader’s position opens at a spread of – 40 pips. As seen in this example, slippage is associated with increased transaction costs.
Slippage is an undesirable phenomenon and the only way to avoid it is by using brokers who offer direct market access. |
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