Slippage can occur when market prices move quickly and there is a difference between the price you request and the price available at execution. Common factors that can cause slippage include:
- High market volatility, especially during major economic news or unexpected events
- Low liquidity, where fewer buyers and sellers are available in the market
- Fast price movements, causing prices to change between order placement and execution
- Market gaps, such as at market open or after weekends
While slippage cannot be completely avoided in live market conditions, you can reduce its impact by using limit orders instead of market orders and avoiding trading during periods of extreme volatility. However, limit orders may not be filled if the market does not reach your specified price.
