Glossary
Slippage
Slippage is the difference between the price a trader expected and the price the order actually filled at.
What it means
Slippage happens because prices move between the moment an order is sent and the moment it fills. It is most common with market and stop orders in fast markets, around news and at the weekly open, when price can gap past a level. Slippage can go against the trader or in their favor, and it is usually larger on less liquid instruments.
For prop traders, slippage matters because loss limits are strict. A stop loss placed just inside the daily loss limit can fill beyond it in a fast market and breach the account. Firms should state how their platform handles slippage, and traders should leave a buffer between their stop and any limit.
Worked example
Illustrative numbers: a trader buys 2 lots of EUR/USD at 1.1000 with a stop loss at 1.0950, planning a $1,000 loss. A news spike gaps the price and the stop fills at 1.0945. The extra 5 pips at $20 a pip add $100, so the loss is $1,100.
Free tools that use this
- Futures tick value calculatorThis calculator shows what a price move is worth on a futures contract. In words: the number of ticks in the move, times the value of one tick,...
- Economic calendarAn economic calendar lists scheduled releases such as interest rate decisions, inflation data and jobs reports, with the time and expected impact...
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