What Is Slippage?

Slippage is a term used in financial trading and financial markets to refer to the difference between the price expected by a trader and the actual execution price when an order is executed. Slippage occurs due to imperfections in market liquidity, rapid price changes, or indirect order execution.

For example, when a trader enters an order to buy or sell an asset at a certain price, but the final execution price is different due to sudden market changes.

Slippage can have a significant impact especially in markets with low liquidity or high volatility. This can cause order execution at undesirable prices, thereby affecting trading results and investment performance.

Some platforms and traders use risk management and stop-loss orders to reduce the impact of slippage and protect positions from unexpected price movements.

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