What Causes Slippage
Slippage occurs because markets are constantly moving. When you click to buy or sell, your order is sent to the broker or liquidity provider, and it fills at the next available price.
Common reasons for slippage include:
High Volatility: During news releases or strong market moves, prices can jump several points in milliseconds.
Low Liquidity: If there aren’t enough buyers/sellers at your chosen price, your order may fill at the nearest available price.
Spreads Widening: Around market opens/closes or major news events, spreads can widen, causing your entry or exit to execute further from your expected level.
Slippage and Stop Losses
Stop losses are not guaranteed. If price gaps past your stop level (for example, during a big spike), your trade will close at the next available price, which could be worse than what you set. This can sometimes cause your equity to dip below your daily drawdown limit, triggering a breach even if you had a stop loss in place.
Positive vs. Negative Slippage
Positive Slippage: You get a better fill than expected (your order executes at a more favorable price).
Negative Slippage: You get a worse fill than expected (your order executes at a less favorable price).
Both are normal — and which one you experience depends entirely on the speed and direction of the market at that moment.
How to Minimize Slippage
While slippage can’t be eliminated entirely, you can reduce its impact:
Avoid trading during major news announcements unless that’s part of your strategy.
Use limit orders for entries where possible, which only execute at your chosen price or better (not guaranteed for exits).
Trade during times of higher liquidity (London/New York session overlaps for Forex).
Use appropriate lot sizes — very large orders are more likely to slip, especially on thinly traded assets.
Key Takeaway
Slippage is a normal part of live market execution. It’s not a platform error — it’s the natural result of orders being matched in a real-time market environment. Understanding slippage helps you plan risk better and avoid surprises when prices move fast.