Slippage occurs when your order executes at a different price than expected. It can be positive (better price) or negative (worse price).
Causes
- High volatility — Prices move rapidly between order and execution
- Low liquidity — Not enough orders at your expected price
- News events — NFP, rate decisions cause rapid price changes
- Gaps — Weekend/holiday openings
Types
| Type | Description | Example |
|---|---|---|
| Positive | Better price | Want 1.0850, get 1.0848 |
| Negative | Worse price | Want 1.0850, get 1.0852 |
| Zero | Exact price | Want 1.0850, get 1.0850 |
How to Minimize Slippage
✅ Use limit orders instead of market orders ✅ Avoid trading during high-impact news ✅ Trade during high-liquidity sessions (London/NY) ✅ Choose brokers with fast execution ✅ Use guaranteed stop losses (if available)
Key Points
- Some slippage is normal and unavoidable
- ECN brokers typically have less slippage
- Slippage can work in your favor too
- Guaranteed stop losses eliminate slippage risk (for a fee)