Pros and cons of slippage
Pros of slippage
Although slippage is normally associated with negative market movement, it can occur in any direction, which means that you can also experience positive slippage. This is when your order is submitted, and the best available price suddenly changes while the order is being executed. Your order could then be filled at a better price.
Cons of slippage
The cons of slippage are evident if negative slippage occurs. Negative slippage is when you have a stop set but it can’t be processed quickly enough, and your order is filled at a worse price than expected. This could result in a smaller profit or a larger loss.
The impact of slippage can be avoided by attaching a guaranteed stop to your trade. Unlike basic stop losses, a guaranteed stop will always fill your trade at the price at which you have set it. There may be a charge to pay for this protection. With IG, you’ll pay a small premium if your guaranteed stop is triggered.