{"id":5679,"date":"2020-09-18T19:05:45","date_gmt":"2020-09-18T16:05:45","guid":{"rendered":"https:\/\/roboforex.com/blog\/?p=5679"},"modified":"2023-06-23T09:20:05","modified_gmt":"2023-06-23T06:20:05","slug":"what-is-slippage-in-forex","status":"publish","type":"post","link":"https:\/\/roboforex.com/blog\/blog\/2020\/09\/18\/what-is-slippage-in-forex\/","title":{"rendered":"What is Slippage in Forex?"},"content":{"rendered":"\n

In this review, we will discuss such a notion as slippage. This is quite a frequent phenomenon in Forex<\/a> and other financial markets that influences the opening and closing prices of a position.<\/p>\n\n\n\n

<\/span>What is slippage and how does it appear?<\/span><\/h2>\n\n\n\n

Slippage<\/strong> is the deviation of the execution price of a market order<\/a> from the market price during the time of execution. To put it simply, it is the difference between the closing\/opening quotation of the position and the factual opening\/closing price. On the chart, slippage sometimes looks like a small gap<\/a> on smaller timeframes<\/a>.<\/p>\n\n\n\n

Slippage emerges when the market execution method is used. This is the most advanced and popular contemporary method of trading in Forex<\/a>. Orders are executed quickly, with a guarantee, without requotes at the current market price, even if it has slipped (changed) a bit during the processing time. Slippage can be either positive or negative.<\/p>\n\n\n\n

<\/span>Positive slippage<\/span><\/h3>\n\n\n\n

A positive slippage means that a position is opened\/closed at a slightly better price than in the order. For example, a trader has an open buying position in GBP\/USD<\/a> at the price of 1.2800. The rate of the pair grows by a “pattern” (100 points), and the price reaches 1.2900. The trader sees this price in the order and closes the position. However, thanks to a powerful ascending movement, the price grows a bit more during the order processing time, and the position closes at the price of 1.2901. The slippage amounts to 1 point in the trader’s favor.<\/p>\n\n\n\n

<\/span>Negative slippage<\/span><\/h3>\n\n\n\n

In this case, a position is opened\/closed at the price slightly worse than initially ordered. For example, a trader is waiting for weak news in the EU and plans to sell EUR\/USD<\/a>. The news comes out worse than expected, and the pair starts declining fast. The trader sees 1.1850 in the order and decides to sell. However, while the order was being processed, the price went even deeper down due to a strong descending impulse, and the trade opened at 1.1845. The slippage amounts to 5 points against the trader.<\/p>\n\n\n\n

Slippage is frequent in trading at market quotations, not only in Forex but also in other financial markets (stock, commodity). As a rule, slippage in the main currency pairs is small (about 1 point in a calm market). Slippage is most critical for scalping<\/a> strategies that are characterized by a very large number of trades with the goal of several points.<\/p>\n\n\n\n

\"Slippage\"<\/a>
Slippage<\/figcaption><\/figure>\n\n\n\n

<\/span>Is the broker to blame for slippage?<\/span><\/h2>\n\n\n\n

Quite often, traders who face negative slippage wonder: Isn’t it the broker’s fault? Well, this is possible if your broker is unprofessional. The company’s equipment might be faulty, which makes orders lag, or the broker increases the commission fee below the belt.<\/p>\n\n\n\n

That is why you should be extremely cautious when choosing your broker. This must be a trustworthy company that has been in the market for years, has a license, and a good reputation. Then your orders will be executed almost immediately with minimal slippage. Moreover, slippages must appear in both ways – positive and negatives.<\/p>\n\n\n\n

<\/span>Factors influencing slippage<\/span><\/h2>\n\n\n\n

Slippage might occur due to several factors that must be accounted for in trading:<\/p>\n\n\n\n