What Is Slippage in Trading?
Slippage is the difference between the price you expected when you placed an order and the price it actually filled at, caused by the short delay before an order reaches the market. What causes it, the difference between positive and negative slippage, how market and limit orders compare, and why it matters for backtests and trading journals.
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In short. Slippage is the difference between the price you expected when you placed an order and the price your order actually filled at. It happens because a short delay always exists between sending an order and it reaching the market, and during that delay the price can move. Slippage can work against you (negative slippage) or in your favor (positive slippage), and it shows up most with market orders during fast-moving or thin markets.
What slippage means
Slippage occurs when an order is filled at a price different from the one requested, as defined by Babypips Forexpedia. The gap between the price you clicked and the price you actually paid or received is the slippage itself, measured in pips, cents, or points depending on the market.
Slippage is not inherently a loss. Any mismatch between the intended execution price and the actual execution price counts as slippage, whether it moves the fill in your favor or against you. What makes it worth tracking is that, over hundreds of trades, negative slippage quietly erodes returns the same way spread and commission do, even though it rarely shows up as a single obvious line item.
Why it happens
An order takes a real path: it leaves your platform, travels to your broker, gets checked against your available margin, and only then gets matched against the market. According to Pepperstone, that chain of steps creates a short delay, and if the market price shifts during it, the order fills at whatever price is available when it finally reaches the market rather than the price displayed when you clicked.
That delay is normally a fraction of a second, so the price rarely moves far. It moves furthest during high volatility, for example around major economic releases, breaking news, or the open of a session, and in thinner, less liquid markets where fewer buyers and sellers are waiting at any given price.
Important. Slippage is not limited to market orders placed by hand. A resting stop-loss order can also slip if the market gaps through the stop price before it can be filled, meaning the actual exit can land further away than the stop level suggested.
Types of slippage
Using a EUR/USD buy order requested at 1.1050 as an example, the fill can land in one of three places:
| Outcome | What happens | Example fill |
|---|---|---|
| No slippage | The requested price is still available when the order reaches the market | Filled at 1.1050 |
| Positive slippage | The price moves in the trader's favor before the fill | Filled at 1.1045, five pips better |
| Negative slippage | The price moves against the trader before the fill | Filled at 1.1057, seven pips worse |
Negative slippage draws more attention because it directly increases trading costs, but positive slippage happens through the same mechanism and is just as real, only in the trader's favor.
Market orders vs limit orders
The order type placed changes how much control a trader has over slippage.
| Order type | Slippage risk | Trade-off |
|---|---|---|
| Market order | Highest, fills at the best available price whatever that is | Guarantees the order fills, but not the price |
| Limit order | Low to none, only fills at the specified price or better | Guarantees the price, but the order may not fill at all |
| Stop order | Moderate to high once triggered, converts into a market order | Protects against not exiting, but the exit price is not guaranteed |
Choosing a limit order over a market order trades fill certainty for price certainty, a reasonable swap in calm, liquid markets that can mean missing an exit entirely during a fast move.
Why it matters for your results
Slippage is a real execution cost, alongside spread and commission, and it sits between a strategy that looks good on paper and the same strategy's live results. A backtest calculated on chart prices with no execution delay will not reflect it at all, one reason live results tend to run behind backtested ones, a gap covered in more detail in backtesting vs trade journaling. It also changes the R actually captured on a trade relative to what was planned from the stop and target, see what is an R-multiple and what is risk-reward ratio for how planned and realized results are compared. Reviewed across a full track record, small per-trade slippage is part of what separates a strategy's theoretical average win/loss ratio from what a trading journal actually records, covered in what is average win/loss ratio.
This article is for educational purposes only and is not financial or investment advice. Slippage is a normal part of live execution, not a broker error by default, though repeated excessive slippage is worth raising with a broker. Trading with leverage can result in losses that exceed the amounts risked on individual trades.
Log the entry price expected against the price actually filled, and let the BitStat trading journal show how much execution slippage is costing your results over time.
Frequently asked questions
What is slippage in trading?
Is slippage always bad?
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BitStat Team
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