Slippage is a common occurrence in trading that can influence the outcome of your positions, particularly during periods of high volatility. At its core, slippage refers to the difference between the price you anticipate when submitting a trade and the price at which it is actually executed. This happens because the Forex market is decentralized and operates around the clock, with prices changing rapidly in fractions of a second, your order may arrive just as conditions shift. Slippage becomes more likely during volatile times, such as major session opens, red-folder news releases, or low-liquidity hours, where sudden price swings widen the gap between expected and actual fills.
For example, if you're targeting EUR/USD at 1.1000 and place a market order to buy, the execution might fill at 1.1002 due to a quick price move or not enough liquidity at your desired price. This results in a slippage, entering you at a less favorable level. On the positive side, slippage can work in your favor, filling at a better price like 1.0998 for an advantage.
In simulated environments like prop challenges, slippage mimics real conditions.
While it's impossible to eliminate slippage entirely, you can reduce its impact.
Consider using limit orders to cap your fill price
Avoid major news releases - use economic calendars like Forex Factory to sidestep red-folder events.
Ultimately, slippage is a normal part of trading - it happens everywhere, and no broker can eliminate it entirely. The key is learning to factor it into your risk math upfront.