Definition
What is Slippage?
Slippage is the difference between the expected price of an order and the price at which it is actually filled.
Market and stop orders fill at the best available price when they are triggered. If the price moves between the trigger and the fill, the result is slippage.
It is worst when liquidity is thin: around high-impact news, at the market open after a weekend and in fast moves. In calm markets it is usually small.
Slippage can be positive as well as negative, but planning should assume the negative case, especially for stops placed close to a news release.
Example
Example: a stop at 1.0800 on 1 lot of EURUSD fills at 1.0796 during a fast move. That is 4 pips of slippage, or $40 more than the planned loss.
At a prop firm
Under the Axora Funded terms, spreads, commissions, swaps and slippage all count towards results and loss limits. Leaving room between your planned loss and the daily limit covers it.
Frequently asked questions
Can slippage breach my daily loss limit?
Yes, if the planned loss was already very close to the limit. Keep a buffer.
Do limit orders slip?
Limit orders, such as a take profit, fill at their price or better; stop and market orders can slip.