DEFINITION of 'Slippage'

The difference between the expected price of a trade, and the price the trade actually executes at. Slippage often occurs during periods of higher volatility, when market orders are used, and also when large orders are executed when there may not be enough interest at the desired price level to maintain the expected price of trade.

Slippage is a term often used in both forex and stock trading, and although the definition is the same for both, slippage occurs in different situations for each of these types of trading.


In forex, slippage occurs when a limit order or stop loss occurs at a worse rate than originally set in the order. Slippage often occurs when volatility, perhaps due to news events, makes an order at a specific price impossible to execute. In this situation, most forex dealers will execute the trade at the next best price.

Slippage in the trading of stocks, often occurs when there is a change in spread. In this situation, a market order placed by the trader may get executed at a worse than expected price. In the case of a long trade, the ask may have increased. In the case of a short trade, the bid may have lowered. Traders can help to protect themselves from slippage by avoiding market orders when not necessary.

  1. Electronic Communication Network ...

    An electronic system that attempts to eliminate the role of a ...
  2. Implementation Shortfall

    In trading terms, the difference between the prevailing price ...
  3. Spread

    1. The difference between the bid and the ask price of a security ...
  4. Ask

    The price a seller is willing to accept for a security, also ...
  5. Transaction Costs

    Expenses incurred when buying or selling securities. Transaction ...
  6. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
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