Forex trading involves risk. Losses can exceed deposits

Slippage definition

Forex trading involves risk. Losses can exceed deposits

What is slippage?

Slippage is the term for when the price at which your order is executed does not match the price at which it was made. It can affect lots of different types of orders – if slippage occurs on a stop, for instance, then it may not be triggered at the level at which it was set.

How does slippage occur?

Slippage occurs when the market moves suddenly against your order, and in the time it takes for your broker to process your order, the original price stipulated is no longer available. Because of this, slippage is more likely to occur in periods of high volatility, though it can occur at any time.

Slippage example

Say you have an open position on a market that closes over the weekend. When the market reopens on Sunday evening, it is trading at a much lower price than it had been on Friday. 

If you had a stop at some point between these two prices, it would not have been filled while the market was shut, and your order would be filled at a worse price than expected.

 

Orders prone to slippage

  • Market orders, where the broker is authorized to make a trade at the best available next price. This can be exaggerated for large market orders, when finding liquidity can be hard.
  • Stop-losses and take-profits, when a sudden price movement makes it impossible to carry out a trade at the price specified in the order.

How do I prevent slippage?

The best way of avoiding slippage is to plan out trades well in advance, or to make use of risk management tools like guaranteed stops that eliminate the risk of slippage.

Unlike standard stop losses, a guaranteed stop will always complete trades at the price at which you have set them – if your stop loss is triggered, there will be a small premium to pay in addition to normal transaction fees.

Contact us

New Accounts

1 844 IG USA FX

newaccounts.us@ig.com

Trading Services

1 312 981 0498

helpdesk.us@ig.com