What Is Slippage in Trading?

What is slippage? Learn why orders fill at a different price from the one you clicked, when it is most likely, why it can be positive as well as negative, and which order types are exposed to it.

Slippage is the difference between the price you expected an order to fill at and the price it actually filled at. It happens because the market can move in the fraction of a second between the order being sent and the order being matched.

Key Takeaways

• Slippage can be negative (worse than expected) or positive (better than expected). Both are normal.
• It is most likely when liquidity is thin or the market is moving fast: news releases, session opens, weekend gaps.
• Market orders and triggered stop orders are exposed to it. Limit orders are not, but may not fill.
• Slippage is separate from the spread. The spread is known in advance; slippage is not.

How Slippage Works

When you click buy, your platform sends a request at the price you saw. That request travels to the broker's server, which matches it against the prices available from its liquidity providers at that instant. If the best available price has moved since your screen was drawn, the order fills at the new price.

In a deep, quiet market the gap is usually zero or a fraction of a pip. In a fast or thin market it can be several pips, occasionally far more.

Three things make slippage more likely:

• Volatility. Prices are changing faster than orders can be matched.
• Low liquidity. Fewer orders are available at each price, so a fill has to reach further to find enough volume. Thin overnight sessions and less-traded instruments both qualify.
• Order size. A large order consumes the available volume at the best price and fills the rest at worse prices.

Positive and Negative Slippage

Slippage is not always against you. If you send a buy order at 1.08500 and the price ticks down to 1.08495 before it matches, you fill better than expected. That is positive slippage.

Whether you receive positive slippage depends on the broker's execution model. Some pass on price improvements; some fill at the requested price or worse only. This is a legitimate question to ask before opening an account. MarketsAll's execution policy is set out in the account terms.

Which Orders Slip

The middle row is the one that surprises people. A stop-loss order is an instruction to close at market once a level is touched. It guarantees the instruction, not the price. When the market gaps through the level, the stop fills at the next available price, which may be well beyond it. This is covered in detail in gap risk.

Worked Example

You hold 1.00 lot long EURUSD with a stop-loss at 1.08000. A data release lands and the price drops from 1.08050 to 1.07920 in one move.

The stop worked as designed. The $80 is slippage: the difference between the level you set and the level you got, because no one was quoting at 1.08000 when the order became live.

Now the same event with a limit order to buy at 1.07950. The price falls through it and keeps going. If the broker cannot fill at 1.07950 or better, the order stays open — no negative slippage, but also no fill.

(Illustrative prices. Actual slippage varies with market conditions and the instrument.)

Why It Matters

Slippage is a cost that does not appear in the contract specification. Spread, swap and commission are known before you trade; slippage is only known afterwards.

For most traders in most conditions it is small. It stops being small in three situations: trading around scheduled releases on the economic calendar, holding positions over the weekend, and running a strategy that depends on precise fills — scalping in particular, where a pip of slippage can exceed the intended profit.

Risks Related to Slippage

• Tight stops in fast markets. A stop placed a few pips from the price is the most likely to fill far from its level.
• Assuming a stop caps the loss. It caps the intent. The realised loss can be larger.
• Blaming the broker for every slip. Some slippage is structural. The question is whether it is symmetric — whether you receive the good fills as well as the bad ones.

Is slippage the same as the spread?

No. The spread is the gap between bid and ask at a given moment and is visible before you trade. Slippage is the gap between the price you expected and the price you got, and is only visible after.

Can slippage be avoided?

Using limit orders for entries removes negative slippage on those orders, at the cost of possibly not filling. Avoiding news releases and thin sessions reduces it. It cannot be eliminated on stop orders.

Does slippage happen on a demo account?

Demo accounts often fill at the requested price regardless of conditions. That is one reason demo results can flatter a strategy; see demo vs live accounts.

What is a "maximum deviation" setting?

On some execution modes MT5 lets you specify the largest price difference you will accept on a market order. If the available price is further away than that, the order is rejected rather than filled. Whether this setting applies depends on the execution mode of the instrument.

Is slippage worse in forex or in shares?

It depends on liquidity, not asset class. Major currency pairs in London hours slip less than most shares; an exotic pair at 22:00 UTC can slip more than a large-cap share at the open.

Related Terms

Spread · Stop-loss orders · Gap risk · Volatility and liquidity · Contract specification