Slippage occurs when an order is executed at a different price from the price requested. This can happen when market prices change between the time an order is placed and the time it reaches the market for execution.
Slippage is a normal part of trading and may be either:
- Positive slippage – your order is executed at a better price than requested.
- Negative slippage – your order is executed at a less favourable price than requested.
Slippage is not an additional fee or charge. It is a result of real market conditions and is common in Forex and CFD trading.
What Causes Slippage?
Slippage is more likely to occur when prices move quickly or when there is limited liquidity available at the requested price.
Common causes include:
High Market Volatility
Major economic announcements, central bank decisions, geopolitical events, and unexpected market developments can cause prices to move rapidly, increasing the likelihood of slippage.
Low Market Liquidity
When there are fewer buyers and sellers in the market, there may not be enough available volume at the requested price to fill an order immediately.
Fast Price Movements
Prices can change within milliseconds between the time an order is submitted and the time it is executed.
Market Gaps
Prices may gap between trading sessions, particularly after weekends, public holidays, market opens, or major news events. In these situations, orders may be executed at the next available market price.
Example of Slippage
Suppose you place a market order to buy EURUSD at 1.1000.
By the time the order reaches the market:
- If the best available price is 1.0998, the order receives positive slippage.
- If the best available price is 1.1003, the order receives negative slippage.
In both cases, the order is executed at the best available market price at the time of execution.
How Can I Reduce Slippage?
Although slippage cannot be completely eliminated in live market conditions, there are several ways to reduce its likelihood:
Trade During Liquid Market Hours
Higher market liquidity generally results in tighter pricing and a lower likelihood of significant slippage.
Avoid Trading During Major News Events
Periods of high volatility can cause rapid price movements and wider price gaps.
Use Limit Orders
A limit order specifies the maximum buy price or minimum sell price you are willing to accept.
This can help control execution prices, but there is no guarantee that the order will be filled if the market does not reach your specified price.
Maintain a Stable Internet Connection
A stable connection helps ensure that orders are transmitted to the trading server as quickly as possible.
Important Note
- Slippage occurs when an order is executed at a different price than requested.
- Slippage can be either positive or negative.
- Slippage is a normal characteristic of market execution and is not an additional fee.
- High volatility, low liquidity, rapid price movements, and market gaps can increase the likelihood of slippage.
While slippage cannot be completely avoided, using limit orders and avoiding periods of extreme market volatility may help reduce its impact.
Need More Help?
If you have questions about slippage, order execution, or pricing on your account, please contact tradingenquiry@monetamarkets.com and provide:
- Your trading account number
- The instrument traded
- The order time and date
- A screenshot of the trade details (if available)
Providing this information will help us investigate your enquiry more efficiently.
