How it works
When you submit a market order, the platform sends it to whatever venue is providing the price. By the time the venue acknowledges, the best available price may have moved. The fill happens at that new price, not the one you saw a moment ago. Limit orders avoid this by refusing to fill outside your set price, but they trade certainty of execution for certainty of cost.
Example
You click buy on EUR/USD when the screen shows 1.0856. By the time the order reaches the matching engine, the best ask has moved to 1.0858. Your fill is 1.0858: that is 2 pips of slippage, roughly $20 on a standard lot. Stop-loss orders are particularly exposed: a 30-pip stop on a gappy news release can fill 50 or 80 pips beyond the trigger.
When slippage spikes
- News releases (NFP, CPI, central bank decisions)
- Market open and close, especially Sunday open in forex
- Low-liquidity pairs and exotic crosses
- Large order sizes that walk through the book
Why it matters
Slippage is invisible until it eats your edge. A scalping strategy with a 2-pip target dies on 2 pips of consistent slippage. Track average slippage per strategy and per session, the same way you track spread.
