slippage
The difference between the price you expected and the price you actually got, common in fast or thin markets.
Slippage is the difference between the price expected when an order is placed and the price at which it actually fills. It can be positive or negative, though traders often use the word for a worse-than-expected fill.
It is more likely when prices move quickly or available orders are limited. A market order can fill at more than one price if the quantity available at the first price is too small. Slippage is one possible trading cost and makes the final result differ from a chart-only calculation.
Example
Marc expects to buy 10 units of Bluefin Energy at $20 each, for an expected total of 10 × $20 = $200. By the time the order fills, 10 units execute at $20.20 each, so the actual total is 10 × $20.20 = $202. The adverse slippage is $202 − $200 = $2, or $0.20 per unit, before any other fees. The difference describes this fill; it does not imply every order will slip by the same amount.
Common mistakes
- Assuming the last quoted price is the fill price. The market can move before execution.
- Counting only price movement and leaving out slippage. Actual costs can make a result smaller.
- Thinking slippage is always negative. The fill can also be better than expected.
- Treating one fill as a reliable estimate for every market condition. Most people who trade lose money.
Learn it in the course
- Where the money goes: spread, fees and slippage · Every trade starts a little in the red. See the costs that eat small gains and why many tiny trades lose.
- Order types: market, limit, stop · Choose how you enter and leave: right now at any price, only at your price, or when a level breaks. See what each order does in a fast drop, with real fill prices.
- A one-page trading plan · Write five things on one page before you trade: what you trade, when you enter, where you exit, how big you go and when you do not trade at all.