Financial Analyst/ Guest author, RADEX MARKETS
Lee W. is a seasoned professional trader with over 10 years of experience. Passionate about sharing valuable expertise and unique market insights, Lee W. now serves as an external and independent market analyst for RADEX MARKETS.
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Slippage is the difference between the price you expect a trade to be executed at and the price it actually fills at. In forex trading, slippage happens because prices move constantly and liquidity can change in milliseconds, especially during volatile market conditions.
Slippage can be positive or negative, meaning it may either improve your execution price or make it worse than planned. It occurs across all financial markets, forex, indices, stocks, and crypto, and is a completely normal part of how markets function.
This matters because even small execution differences can quietly eat into profits or increase losses over time, particularly for active traders or those trading around news events.
The term “slippage” refers to the change in execution price between the moment an order is placed and when it is filled by the market. In simple terms, you ask for one price, but the market gives you another.
In forex trading, slippage occurs because currency prices are constantly updating as buy and sell orders are matched. If the price you requested is no longer available, even by a fraction of a second, your trade will be filled at the next best available price.
Slippage is most noticeable during periods of high volatility or low liquidity, but it can happen at any time. For this reason, slippage is not a broker trick or a system failure, it is a natural consequence of how live markets operate.
Key characteristics of slippage:
As a result, understanding slippage is essential for realistic trade planning and risk management.
In forex trading, slippage generally falls into three categories: positive slippage, negative slippage, and no slippage. A small amount of slippage is a natural market phenomenon because bid and ask prices are constantly changing as orders flow through the market.
In simple terms, slippage occurs when the price available at the time of execution is different from the price you requested. Whether this difference works for or against you depends entirely on market conditions at that moment.
This matters because traders often focus only on negative slippage, when in reality slippage can sometimes improve execution as well.
Positive slippage occurs when a trade is executed at a better price than expected. In forex trading, this typically happens when price moves in the trader’s anticipated direction between order placement and execution.
For example, you place a buy order on EUR/USD at 1.1000, but due to a quick dip in price, the order fills at 1.0997 instead. You enter the trade at a better price without doing anything differently.
Positive slippage usually occurs during fast markets where liquidity briefly improves or when price momentum works in your favour. For this reason, slippage isn’t always something traders should fear.
Negative slippage happens when a trade is filled at a worse price than expected. This is most common during periods of high volatility, thin liquidity, or sudden market moves against your position.
For instance, you place a stop-loss at 1.1000, expecting to exit there, but a sharp price move causes the order to fill at 1.0990 instead. The trade loses more than planned, even though the stop was placed correctly.
Negative slippage matters because it increases risk beyond what was calculated when the trade was entered.
No slippage refers to situations where the execution price exactly matches the requested price. While this is the ideal outcome, it is less common during active market conditions.
No slippage is most likely to occur during high-liquidity sessions, calm market environments, or when using limit orders instead of market orders. Think of it as getting exactly what you ordered, possible, but not guaranteed in a fast-moving market.
Different types of orders experience slippage in different ways. The way an order is executed, not just market conditions, plays a major role in how much slippage a trader experiences.
Market orders are filled at the best available price, not a guaranteed price. If the market moves quickly, the execution price may differ from what the trader expected.
Stop-loss and take-profit orders are triggered as market orders. During volatile conditions, they may be filled several pips away from their trigger level.
Limit orders avoid slippage by specifying a price, but the trade may not be filled at all if the market never reaches that level.
Weekend slippage occurs when markets reopen after a price gap caused by news or events while the market was closed. Orders are filled at the first available price, not the previous close.
As a result, traders should choose order types based on both strategy and execution risk.
Slippage can be divided into two broad categories: expected slippage and unexpected slippage. The key difference is whether the trader could reasonably anticipate the risk before placing the trade.
Expected slippage occurs during known high-risk periods, such as major economic data releases or low-liquidity trading hours. Unexpected slippage, on the other hand, happens when the market moves suddenly without warning.
Read more：Best time to trade forex: When to enter the market during the day
This matters because traders can plan for expected slippage, but unexpected slippage is where most “what just happened?” moments come from.
Expected slippage refers to execution price differences that occur during predictable market conditions. In simple terms, you know the risk is there before you click the button.
Examples include trading during major news releases, entering trades during thin Asian-session liquidity, or placing market orders during fast-moving markets. In these situations, some loss of price precision is normal and should be factored into the trade plan.
For this reason, expected slippage is a cost of doing business rather than a trading mistake.
Unexpected slippage occurs when price moves sharply without prior warning. This type of slippage is usually larger and far more damaging to risk calculations.
It often happens due to surprise headlines, geopolitical events, sudden market gaps, or technical issues at the exchange or liquidity-provider level. Traders are caught off guard, and stops may fill far away from their intended level.
This is why unexpected slippage represents a higher execution risk and can lead to losses well beyond what was originally planned.
Common Causes of Unexpected Slippage
Read more： forex News
Expected vs Unexpected Slippage Comparison
Category |
Expected Slippage |
Unexpected Slippage |
|---|---|---|
| Definition | Anticipated execution deviation | Sudden, unforeseen execution gap |
| Typical Size | Small to moderate | Moderate to severe |
| Cause | News, volatility, thin liquidity | Shocks, gaps, system issues |
| Market Conditions | Known high-risk periods | Abnormal or sudden moves |
| Order Types Affected | Market & stop orders | All order types |
| Risk Level | Manageable | High |
| When It Happens | Scheduled events | Without warning |
| Impact on Traders | Reduced precision | Increased losses |
As a result, professional traders treat expected and unexpected slippage very differently in their risk management.
Slippage works because markets do not guarantee prices, they match orders. When you place a trade, your order is sent to the market to be filled at the best available price at that moment.
If your requested price no longer exists due to rapid price movement or insufficient liquidity, the order is filled at the next available level. The faster the market moves, the greater the chance that your intended price disappears before execution.
To put it simply, slippage is not about getting a “bad fill”, it’s about the reality of trading in a live, constantly moving market.
Slippage is caused by a mismatch between the price a trader requests and the prices actually available in the market at that moment. This usually happens when price moves faster than orders can be filled, or when there isn’t enough liquidity at the desired level.
In simple terms, if nobody is willing to trade at your price, the market moves on without you. The order still gets filled, just not where you hoped.
Understanding the root causes of slippage helps traders anticipate when execution risk is highest.
High volatility is one of the most common causes of slippage. During volatile conditions, prices can jump multiple levels in a fraction of a second, leaving no time for orders to fill at the requested price.
This typically occurs around major economic news releases, central bank announcements, or surprise headlines. Even a well-placed stop-loss can suffer slippage if price accelerates too quickly.
This matters because volatility-driven slippage is unavoidable once price starts moving aggressively.
Low liquidity means fewer buyers and sellers are available at each price level. When liquidity is thin, even small trades can push price to the next level, resulting in slippage.
This is most common during off-peak trading hours, holidays, or late-session periods. Importantly, price does not need to move far for slippage to occur, it simply needs to move where no orders exist.
For this reason, traders often experience slippage even in relatively quiet markets.
Market gaps occur when price jumps from one level to another without trading in between. When this happens, stop-loss orders are triggered as market orders and filled at the first available price.
This can result in significant slippage, especially after weekends or unexpected news events. Crucially, this type of slippage is completely unavoidable, there is no price to fill at in between.
This is why holding trades over the weekend always carries additional execution risk.
Different order types expose traders to different slippage risks. Market orders accept any available price, making them the most vulnerable to slippage.
Stop orders convert into market orders once triggered, which is why stop-loss slippage is so common during fast markets. Limit orders avoid slippage entirely, but at the cost of potentially missing the trade.
As a result, order selection plays a major role in execution quality.
Spread widening occurs when the gap between the bid and ask prices increases sharply. This often happens during periods of high volatility or low liquidity.
When spreads widen, execution prices can shift dramatically, even if the underlying price hasn’t moved much. Traders may experience slippage simply because the tradable prices have changed.
This is why slippage and spread widening often go hand in hand.
Read more:What Is the Spread in Forex? Learn to Calculate and Trade It
The most common way slippage occurs is when a trader uses a market or stop order during fast-moving market conditions. In these situations, the price the trader sees on the chart may no longer be available by the time the order reaches the market.
In practice, slippage is more often unfavourable than favourable, particularly when exiting trades under pressure. However, positive slippage does occur and is simply less talked about.
A trader places a stop-loss on EUR/USD ahead of the Non-Farm Payroll (NFP) report. The stop is set at 1.1000, and the trader expects to exit there if the trade goes wrong.
When the data is released, price spikes sharply and gaps through multiple levels. The stop-loss is triggered but fills at 1.0985 instead. The trader loses more than planned, even though the stop was placed correctly.
This is a classic example of volatility-driven negative slippage.
A trader places a market buy order on GBP/USD at 1.2500 during an active London session. As the order is being executed, price briefly dips due to a large sell order entering the market.
The trade fills at 1.2497 instead of 1.2500. The trader starts the position with a slightly better entry, gaining positive slippage without intending to.
This example shows that slippage isn’t always harmful, it’s simply part of live market execution.
A trader holds a position over the weekend with a stop-loss set at 1.2000. Over the weekend, unexpected geopolitical news breaks.
When the market opens on Sunday night, price gaps down and the stop-loss fills at 1.1950. The loss is significantly larger than planned, despite proper risk management during the week.
This illustrates why weekend slippage is one of the most dangerous forms of execution risk.
As a result, slippage should always be treated as a probability, not an exception, especially during high-risk market conditions.
Slippage tends to occur during specific market conditions rather than randomly. While it can happen at any time, certain periods consistently produce higher execution risk.
Understanding when slippage is most likely allows traders to adjust position size, order type, or avoid trading altogether.
Slippage is extremely common during major economic announcements, particularly when results differ from market expectations.
Common slippage-heavy events include:
These events cause sudden volatility, spread widening, and rapid price jumps.
At market open and close, liquidity can be uneven and spreads unstable. Orders placed during these times may be filled at unexpected prices, especially if markets open with a gap.
Slippage is more likely during quiet trading sessions, such as late U.S. hours or holiday periods. Fewer participants mean fewer prices available to trade at.
Certain order types are naturally more vulnerable:
This is why execution risk should always be considered when choosing how to enter or exit a trade.
While slippage can never be eliminated entirely, traders can take several steps to reduce how often it occurs and how severe it becomes. The goal isn’t perfect execution, it’s damage control.
In simple terms, slippage is about when you trade, what you trade, and how you place orders. Get those three right, and slippage becomes an occasional inconvenience rather than a regular account killer.
High-impact economic news is one of the biggest causes of slippage. During these moments, spreads widen, liquidity thins, and prices jump multiple levels in seconds.
Events such as NFP, CPI, GDP releases, and central bank decisions are prime examples. Traders who insist on trading during these periods must accept a higher execution risk.
For this reason, using an economic calendar and staying out of the market during major announcements is one of the simplest ways to reduce slippage.
High-liquidity markets generally offer better execution and tighter spreads. Major currency pairs such as EUR/USD, GBP/USD, and USD/JPY tend to have more participants and deeper order books.
Trading during active sessions, particularly the London and New York overlap, also improves execution quality. This matters because liquidity, not volatility, is the trader’s best friend when it comes to slippage.
Limit orders allow traders to specify the exact price they are willing to trade at. This removes slippage entirely, but it introduces a new risk: the trade may not be filled.
Market orders guarantee execution but not price, while limit orders guarantee price but not execution. Choosing between them depends on whether execution certainty or price precision matters more for the strategy.
For this reason, disciplined traders often use limit orders for entries and market orders only when speed is essential.
Larger orders are harder to fill cleanly, especially in thin markets. Big positions may be filled across multiple price levels, increasing slippage.
Reducing position size improves execution and keeps price impact to a minimum. This is particularly important for retail traders operating outside peak liquidity hours.
Guaranteed stop-loss orders ensure that a stop is filled at the exact price specified. These are most useful during extreme volatility or when holding trades over high-risk periods.
The trade-off is cost, guaranteed stops usually come with wider spreads or additional fees. However, for traders who value certainty over cost, they can be a valuable risk-management tool.
Weekend gaps are a major source of unexpected slippage. News events can occur while markets are closed, causing price to reopen far from Friday’s close.
Closing trades before the weekend removes this risk entirely. This is why many experienced traders prefer to start each week flat and risk-free.
Sometimes slippage is unavoidable. When that happens, the goal shifts from avoiding it to trading around it intelligently.
Limit orders prevent slippage by refusing to fill at worse prices. While this may mean missing some trades, it protects execution quality over the long term.
Stop-limit orders add a price cap to stop execution. This prevents extreme slippage but introduces the risk of not being filled during fast markets.
They are best used in moderately volatile conditions rather than extreme news events.
Major pairs typically have tighter spreads, deeper liquidity, and better execution. Exotic and minor pairs are far more prone to slippage, especially during off-hours.
Scaling into trades reduces execution pressure. Instead of entering a full position at once, traders build positions gradually across multiple price levels.
This approach reduces slippage and smooths out average entry price, particularly in volatile markets.
Read more：15 Best Trading Strategies Recommended by Top Traders
Slippage in forex is the difference between the expected price of a trade and the price at which it is actually executed. It can be positive or negative and usually occurs during volatile or low-liquidity market conditions.
Slippage can be both good and bad. Positive slippage means a trade is executed at a better price than expected, while negative slippage results in a worse execution price and higher trading costs.
Normal slippage depends on the market, liquidity, and volatility. In highly liquid forex pairs during active sessions, slippage is often minimal, but it can increase significantly during news releases, gaps, or thin markets.
Slippage is not a flaw in trading; it’s a reality of live markets. Prices move, liquidity changes, and orders are matched in real time, not at guaranteed levels. Once traders accept this, slippage becomes something to manage rather than fear.
The key reason slippage causes problems is not because it exists, but because it’s often ignored when trades are planned. By choosing the right order types, trading during liquid sessions, managing position size, and avoiding high-risk periods, traders can dramatically reduce its impact.
In simple terms, slippage rewards preparation and punishes complacency. Understand it, plan for it, and it stops being a nasty surprise and becomes just another part of professional trading.
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