Do you place an order at one price but get filled at another? That is slippage, a phenomenon that occurs frequently when the market moves sharply. Understanding the causes and how to limit slippage helps you reduce hidden costs and protect your trading plan. Find more risk-management articles on the ITF Blog.

What is slippage?

Slippage is the difference between the price you expect when placing an order and the price at which the order is actually filled. It can be negative (filled worse) or positive (filled better). For example, you click buy EUR/USD at 1.1000 but the order fills at 1.1003, meaning 3 pips of negative slippage.

Causes of slippage

• Sharp volatility: prices change quickly around big news such as NFP, CPI and rate decisions.

• Low liquidity: few counter-orders make price jump in big steps, common at session opens or off-hours.

• Large order size: large orders may need to fill across multiple price levels.

• Latency: slow internet or a server far from the broker.

• Price gaps: price jumps over weekends or after news.

8 ways to minimize slippage

1. Use limit orders instead of market orders when possible.

2. Avoid opening trades right before and after major news.

3. Trade during high-liquidity sessions, such as the London–New York overlap.

4. Prefer major pairs with deep liquidity.

5. Split large orders into smaller sizes.

6. Set a maximum deviation on MT4/MT5.

7. Use a VPS located near the broker’s server if you run bots or scalp.

8. Choose a broker with a transparent execution model, multiple liquidity providers and clear execution reports.

Is slippage always bad?

Not necessarily. Positive slippage does occur, but you should factor slippage into your plan, especially when your Stop Loss is tight. For scalping, even small slippage can reverse a strategy’s performance.

Conclusion

Slippage cannot be eliminated entirely but can be greatly limited if you choose the right timing, order type and broker. Also read our article on liquidity providers to understand execution quality, and follow forexcryptoinvestment.com for new knowledge.

Trading Forex, Crypto and leveraged products carries a high level of risk and may not be suitable for all investors. The content of this document is for educational and reference purposes only and is not investment advice. Price forecasts by institutions and experts do not guarantee future results. Consider your objectives, experience and risk tolerance carefully before trading.