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Slippage definition
Slippage is the difference between the price you expected when you placed an order and the price the order actually filled at. It shows up across forex, shares, commodities, indices, futures, and CFDs.
Slippage happens when the market moves between the moment you submit an order and the moment it executes, most often in fast-moving or thin markets. It can be negative, filling at a worse price than expected, or positive, filling at a better one. Market orders are the most exposed, because they take the best available price rather than waiting for a set level.
Slippage is not the spread. The spread is the fixed gap between bid and ask that you cross on entry, known before you trade; slippage is the unexpected gap between your intended price and the fill, known only after. A limit order removes price slippage by refusing to fill beyond a set level, though it may then not fill at all. Traders reduce slippage by trading liquid markets and avoiding major news releases.
Slippage Example
You place a market order to buy EUR/USD at 1.0850.
The market moves quickly and the order fills at 1.0853. The slippage is:
1.0853 - 1.0850 = 0.0003, or 3 pips
This is negative slippage, because your fill price is worse than the price you expected.
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