Slippage

Slippage happens because prices change in the time between an order being sent and being filled, or because there is not enough volume at the requested price. Market orders and stop orders, which both execute at the next available price, are the ones that slip. Limit orders fill only at your price or better, so they do not suffer negative slippage, but they may not fill at all.

When it is most likely

• Around major releases such as NFP or central bank decisions.
• At the weekend open, when prices can gap from Friday's close.
• At the daily rollover and in quiet sessions, when liquidity is thin.
• In less liquid instruments such as exotic pairs.
• With large orders relative to available liquidity.

Example

Illustrative figures: you hold 2 standard lots of GBP/USD long with a stop-loss at 1.2650. A surprise data release moves the price from 1.2680 to 1.2630 in one jump, and your stop fills at 1.2632. You planned to lose 30 pips (600 dollars, at 10 dollars per pip per lot) and actually lost 48 pips: 960 dollars. The 18 pips of slippage cost an extra 360 dollars.

Positive slippage

If price moves in your favour between order and fill, you may get a better price. Under EU best-execution rules, brokers should pass on price improvement as well as negative slippage. A broker that only ever slips against clients is a warning sign.

Practical notes

• Plan position sizes knowing a stop is a trigger, not a promise of an exact price.
• Some brokers offer stops with no slippage for an extra fee; check the cost.
• Reviewing fills in a trading journal shows how much slippage really costs you.

See slippage explained and gap risk and weekend risk.