What Is Slippage in Trading? Why It Happens and How to Reduce It

Key Takeaways 

• Slippage is measurable. Compare your expected prices with actual fills and track the difference across a meaningful sample of trades.  

• Stop-loss orders can carry significant execution exposure. A conventional stop does not necessarily guarantee the exact price at which you will exit during a fast move or market gap.  

• Limit orders provide greater price control. The trade-off is that you sacrifice some execution certainty because the market may never reach your specified price.  

• Broker execution matters. Spreads, commissions, liquidity and order handling all contribute to the actual cost of trading, so headline pricing alone is not enough.  

• Review your execution regularly. Track slippage alongside spread, commission and financing costs so you understand what your trading activity is actually costing.  

What is Slippage? 

You click Buy when EUR/USD is showing 1.0850, expecting the position to open at that price, but the confirmation arrives and your trade has actually been filled at 1.0853. The market did not necessarily malfunction, and your broker did not necessarily make a mistake. You have just experienced slippage. 

In trading, slippage is the difference between the price you expect when placing an order and the price at which that order is ultimately executed. It can work against you or, under the right market conditions, in your favour, although the size and frequency of slippage can change considerably depending on liquidity, volatility, order type and execution conditions. 

For a CFD trader, this matters more than it might initially appear because a difference of a few pips or points on one trade can become a meaningful trading cost when you repeat the same process dozens or hundreds of times. 

That is the part worth paying attention to. 

Risk warning: CFDs are complex leveraged products and carry a high level of risk. You can lose money rapidly due to leverage. Make sure you understand how CFDs work and whether you can afford to take the risk. 

What Is Slippage in Trading? 

Slippage is the difference between your expected or requested execution price and the actual price at which your trade is filled. 

Imagine you want to buy EUR/USD at 1.0850. You submit a market order, but by the time the order reaches the available liquidity and is executed, the best available price has moved to 1.0853. You have experienced 3 pips of negative slippage, because you paid more than the price you expected. 

Now consider the opposite situation. You intend to sell EUR/USD at 1.0850, but the order is filled at 1.0847. In this case, the execution is 3 pips better than expected, which is known as positive slippage. 

So, what is price slippage in practical terms? It is simply the gap between what you thought you would get and what the market actually gave you when your order was executed. 

Slippage in one line: the difference between your expected trading price and your actual fill price. 

The gap can be caused by fast price movements, limited liquidity, latency, widening spreads and changes in available market depth, which is why slippage becomes particularly relevant when markets are moving quickly or trading conditions deteriorate. 

For a quick reference, see the BitDelta Slippage Glossary. 

Positive vs Negative Slippage: What Does It Mean for Your Trade? 

Slippage is often discussed as though it is automatically a cost, but that is not technically correct. Negative slippage works against your trade, while positive slippage gives you a better execution price than the one you expected. 

The difference becomes easier to understand when you look at both long and short positions: 

Scenario	Your order	Expected price	Fill price	Result	Effect on P&L
Long, negative	Buy EUR/USD	1.0850	1.0853	-3 pips	Less favourable
Long, positive	Buy EUR/USD	1.0850	1.0847	+3 pips	More favourable
Short, negative	Sell EUR/USD	1.0850	1.0853	-3 pips	Less favourable
Short, positive	Sell EUR/USD	1.0850	1.0847	+3 pips	More favourable

The important distinction is that slippage is not the same thing as the bid-ask spread, and you should not assume that positive and negative slippage will simply cancel each other out over time. 

Execution conditions change. 

When volatility rises or liquidity becomes thinner, the distribution of available prices can change quickly, meaning the actual outcome for your order depends on what is available in the market at the moment it reaches execution. 

This is also where best execution comes into the picture. A broker’s execution policy sets out how orders are handled and the factors considered when determining the available execution price, so understanding that policy can be more useful than looking at a headline spread in isolation. 

Why Does Slippage Happen? 

There is rarely one single reason for slippage. More often, several market and execution factors come together within a very short period, particularly when prices are moving quickly. 

1. Market volatility

When prices are changing rapidly, the price displayed on your platform can become outdated almost immediately. 

Consider a major Federal Reserve announcement. The moment the decision or accompanying statement reaches the market, traders and algorithms can respond almost simultaneously, causing prices and available liquidity to change before an order submitted at the previous price has finished travelling through the execution process. 

That is how a seemingly small delay can produce a different fill. 

2. Thin liquidity

Liquidity describes the amount of buying and selling interest available around current market prices. 

When liquidity is deep, there may be enough available volume near the quoted price to absorb your order without a significant change in execution. When liquidity becomes thin, however, even an order that is not particularly large in absolute terms can consume the available quotes and move into the next price levels. 

This is one reason slippage can become more noticeable in less-liquid instruments and during quieter trading periods. 

3. Latency

Every electronic trade involves some degree of latency, whether it comes from your internet connection, trading platform, broker infrastructure or the distance between systems involved in execution. 

For a discretionary trader, a few milliseconds may not feel important. For an automated strategy operating around rapidly changing prices, however, those milliseconds can determine whether an order reaches the market at one price or the next available price. 

4. Spread widening

The bid-ask spread can widen when market conditions become less certain or liquidity providers reduce the amount of liquidity they are willing to provide at existing prices. 

This often becomes visible around major economic releases, during sudden volatility or when markets are transitioning between active and less-active trading periods. 

A wider spread is not itself slippage, but it can affect the prices available when your order is executed. 

5. High-frequency trading and phantom liquidity

Modern electronic markets can change extremely quickly, and liquidity displayed at a particular price is not necessarily guaranteed to remain there until your order arrives. 

When displayed orders disappear or are replaced before your order can interact with them, the available price may move to the next level. 

For a retail trader, this can look like the market simply skipped the price you saw. 

Which Order Types Are Exposed to Slippage? 

Your order type plays a major role in determining how much control you have over price versus execution. 

There is a fundamental trade-off here: the more you prioritise execution certainty, the less control you may have over the exact price; the more you prioritise price certainty, the greater the possibility that the order will not execute. 

Order type	Fill guaranteed?	Price guaranteed?	Slippage risk	Best used when
Market order	Generally, subject to available liquidity	No	High	Execution is the priority
Limit order	No	Yes, at limit or better	Low	Price is the priority
Stop-loss	Once triggered, generally seeks execution as a market order	No	High during fast markets	You need an automatic exit trigger
Stop-limit	No	Yes, within the limit	Limited, but may not fill	You want greater price control

Market orders 

A market order tells the broker to execute your trade at the best available price rather than waiting for a particular price level. 

That makes market orders useful when getting into or out of a position matters more than receiving an exact price, but it also means you accept the possibility that the final fill will differ from the price you saw when you clicked. 

Limit orders 

A limit order gives you much greater control over the price. 

If you place a Buy Limit at 1.0850, the order should not execute at a worse price than your specified limit. However, there is an obvious trade-off: if the market never reaches your price, the order simply remains unfilled. 

Price certainty, in other words, comes with less execution certainty. 

Stop-loss orders 

This is where slippage deserves particular attention. 

A conventional stop-loss does not necessarily guarantee that you will exit at the exact stop price. Once the stop level is triggered, the resulting order can seek the next available market price, and if the underlying market is moving rapidly or has gapped through the stop, that available price may be materially different from the level you originally selected. 

So if you place a stop-loss at 1.0800, you should not automatically interpret that as a guaranteed exit at exactly 1.0800. 

Stop-limit orders 

A stop-limit order introduces an additional price restriction after the stop is triggered, giving you more control over the worst price at which you are prepared to accept execution. 

But again, there is a trade-off. 

If the market moves beyond your specified limit before your order can be filled, you may end up with no execution at all. You have reduced the risk of an unexpectedly poor fill, but you have increased the risk of remaining in the position. 

When Is Slippage Most Likely? 

If you want to understand forex slippage, one of the easiest places to start is by looking at when markets become unusually active or unusually thin. 

Major economic announcements, market openings, weekend gaps and periods of reduced liquidity can all create conditions in which the available price changes quickly. 

Situation	Typical timing	Markets affected	What to consider
FOMC decision	US trading hours	USD, indices, gold, crypto	Consider reducing new exposure around the release
NFP release	First Friday of the month	USD and major FX pairs	Prices can move rapidly immediately after the data
CPI release	Scheduled economic release	FX, indices, gold	Review open positions before the release
Company earnings	Around market hours	Shares and indices	Gaps can create execution risk
Market open	Session opening	Shares and indices	Opening conditions can differ sharply from the previous close
Sunday open	Weekly FX reopening	FX and related markets	Weekend gaps can affect stop execution
Illiquid periods	Varies by instrument	Less-liquid markets	Fewer available quotes can increase execution risk

Economic releases 

The Federal Reserve’s FOMC decisions, US employment data such as NFP, inflation data such as CPI and major company earnings can all produce rapid repricing. 

If your strategy does not specifically depend on trading these events, one straightforward way of reducing event-driven slippage is to avoid opening new positions immediately around the release. 

Market openings and gaps 

A market can reopen at a substantially different price from where it previously closed, particularly after important news develops while that market is closed. 

Weekend gaps are particularly relevant to forex traders, while equity and index traders also need to consider the difference between a previous session’s closing price and the next session’s opening conditions. 

Two historical examples 

The 2010 Flash Crash demonstrated how rapidly prices and liquidity can change across electronic markets. 

Another notable example occurred on 7 October 2016, when GBP/USD experienced a sharp fall of roughly 6% within minutes during Asian trading hours. The event illustrates why a market that appears relatively quiet can still experience an abrupt change in liquidity and pricing. 

These are extreme historical events, not measures of ordinary trading conditions, but they demonstrate why execution price cannot always be separated from market structure. 

How Much Slippage Is Normal? 

There is no single figure that can be called “normal” for every instrument, broker and trading condition. 

As an indicative reference under normal conditions, major FX pairs can experience slippage below 1 pip, while less-liquid FX pairs, gold, index CFDs, single-share CFDs and crypto CFDs can show different levels depending on liquidity, market conditions and order size. 

Instrument	Indicative slippage under normal conditions
Major FX pairs	Often below 1 pip
Minor and exotic FX pairs	Around 1 to several pips
Gold/XAU	Around 1 to several pips
Major index CFDs	Around 1 to several points
Single-share CFDs	Highly variable
Crypto CFDs	Highly variable

These figures are indicative rather than guaranteed execution ranges, and they should not be interpreted as promises about what you will receive on a particular trade. During major news events, market gaps or periods of unusually low liquidity, actual slippage can be substantially higher. 

There is another detail that traders sometimes overlook: your account balance does not determine market depth. 

A trader with a $10,000 account and a trader with a $100,000 account may experience very different slippage depending on their position sizes, while a relatively small account can still experience noticeable slippage if the position is large compared with the liquidity available at the relevant price levels. 

How to Measure What Slippage Actually Costs You 

If you want to know whether slippage is materially affecting your strategy, stop guessing and start tracking the difference between expected and actual execution prices across your trades. 

A simplified calculation is: 

Slippage cost = (Fill price − Expected price) × Position size × Contract value 

For example, suppose you buy 2 lots of EUR/USD and receive 1.5 pips of negative slippage. 

For a standard lot of EUR/USD, one pip is approximately $10 when USD is the quote currency. 

So: 

1.5 pips × $10 × 2 lots = $30 

That single execution has therefore cost approximately $30 more than the expected price. 

Now consider a trader executing 20 trades a day while averaging 0.8 pips of negative slippage per trade. The individual number may not look dramatic, but repeated execution costs can become meaningful over a month, particularly for short-term strategies where the expected profit per trade is relatively small. 

How to check slippage in MT5 

If you trade using MetaTrader 5, compare your intended entry or exit price with the actual execution price shown in your trade history, then record the difference in points or pips alongside the position size and instrument. 

Do this across a meaningful sample rather than judging your broker from one unusually good or unusually bad trade. 

Over time, you can build a much clearer picture of your actual execution cost, including whether slippage tends to increase around particular instruments, trading sessions or economic events. 

Slippage vs Spread vs Commission 

These three costs are related, but they are not interchangeable. 

The bid-ask spread is the difference between the price at which you can buy and the price at which you can sell. It is generally visible before you enter a position. 

A commission is a fee charged according to the broker’s pricing structure and is usually known as part of the trade’s cost. 

Slippage is different because it is variable. You may only know the actual amount after your order has been executed, because it depends on the difference between the expected and final fill price. 

This distinction becomes particularly important when comparing brokers. 

An account advertised with zero commission does not automatically have the lowest overall trading cost if wider spreads or less favourable execution offset the absence of a separate commission. The sensible comparison is the total cost of execution rather than one headline number. 

What Is Slippage Tolerance and Maximum Deviation? 

Slippage tolerance defines how much price movement you are prepared to accept before an order is rejected rather than executed outside your permitted range. 

On MetaTrader 5, for example, traders may encounter a Deviation setting expressed in points, which allows them to specify the amount of price movement they are willing to accept when submitting certain orders. 

The trade-off is straightforward. 

Set the tolerance too tightly and a rapidly moving market may move beyond your permitted range before the order can be executed, resulting in a rejected or missed trade. 

Set it wider and you increase the chance of execution, but you also accept the possibility of a less favourable fill. 

Tight tolerance: greater price control, but more potential rejections. 

Wide tolerance: greater execution flexibility, but more potential price deviation. 

There is no universal slippage tolerance that works for every strategy, because a scalper, news trader and longer-term position trader may have very different priorities. 

7 Ways to Reduce Slippage in Trading 

You cannot completely eliminate slippage from trading, particularly when markets gap or liquidity disappears, but you can take practical steps to reduce how much exposure your strategy has to it. 

1. Use limit orders when entry price matters

If receiving a particular price is more important than entering the trade immediately, a limit order can provide greater control than a market order. 

The obvious downside is that the market may never reach your limit, leaving the trade unfilled. 

2. Keep position size relative to available liquidity

Large orders can consume several levels of available market depth, particularly when liquidity is limited. 

Rather than looking only at your account balance, consider whether your position size is sensible relative to the liquidity available in the instrument you are trading. 

3. Trade during more liquid market sessions

For major forex pairs, liquidity is generally more concentrated during the periods when major financial centres are active simultaneously, which is one reason the London-New York overlap is often relevant to traders concerned about execution. 

That does not guarantee lower slippage, but trading during active sessions can reduce exposure to some of the conditions associated with thin liquidity. 

4. Be cautious around major economic releases

If your strategy does not require trading through FOMC decisions, NFP, CPI or other major releases, consider reducing exposure before the announcement rather than discovering after execution that the market has moved several price levels. 

News trading is a strategy in itself. 

Treat it that way. 

5. Set maximum deviation deliberately

Your slippage tolerance should reflect your trading strategy rather than being treated as an arbitrary platform setting. 

A tight limit may suit a strategy where price precision is critical, while a wider tolerance may make more sense when execution is the priority. 

6. Reduce latency for automated strategies

If you use automated trading systems, reducing unnecessary network latency can improve execution speed. 

A VPS positioned closer to relevant broker infrastructure can help reduce network delays, although faster connectivity cannot prevent market-driven slippage when the underlying price and liquidity are changing rapidly. 

7. Compare execution quality, not just advertised spreads

When choosing where to trade, look beyond the headline spread. 

Review the broker’s execution model, pricing structure, order handling, liquidity arrangements and available execution statistics where provided. A low advertised spread tells you something, but it does not tell you everything about the price you will ultimately receive. 

What about Guaranteed Stop-Loss Orders? 

A Guaranteed Stop-Loss Order (GSLO) is designed to guarantee execution at the specified stop price, generally in exchange for an additional premium. 

That can remove a specific type of stop-loss slippage, but it comes at a cost and is not offered by every broker. 

BitDelta does not offer GSLOs. If you trade with BitDelta, conventional stop-loss orders should therefore not be treated as guaranteed-price exits during fast markets or gaps. 

That distinction matters when planning your risk. 

Slippage in Crypto: CEX, DEX and CFD Compared 

If you are wondering what is slippage in crypto, the basic concept remains the same, but the mechanism behind it can differ considerably depending on where you trade. 

On a centralised exchange (CEX), slippage is closely connected to order-book depth. A market order that consumes the available liquidity at one price may continue through several price levels before the entire position has been filled. 

On a decentralised exchange (DEX), the process can work differently because many platforms use automated market makers and liquidity pools rather than a conventional centralised order book. The size of your transaction can affect the price according to the pool’s available liquidity and pricing curve. 

There can also be additional considerations such as network fees and MEV-related risks. 

With a crypto CFD, you are trading a derivative rather than directly purchasing the underlying cryptocurrency on-chain. The execution price therefore depends on the broker’s pricing and liquidity arrangements rather than blockchain settlement. 

Venue	Main cause of slippage	Typical tolerance setting	Other potential cost
CEX	Order-book depth	Exchange-specific	Trading fees
DEX	Pool depth and AMM pricing curve	User-defined	Gas and MEV-related costs
Crypto CFD	Broker liquidity and market conditions	Broker/platform dependent	Spread, commission or financing

So when someone asks what does slippage mean in crypto, the simplest answer remains the same: it is the difference between the price you expected and the price you actually received. 

The reason for that difference depends on the trading venue. 

FAQs About Slippage 

Is slippage good or bad? 

Slippage can be either positive or negative. Negative slippage means your trade is executed at a less favourable price than expected, while positive slippage means you receive a more favourable price. The practical concern is how frequently slippage occurs, how large the difference is and how much it adds to or reduces your overall trading costs. 

What is an example of slippage? 

Suppose EUR/USD is showing 1.0850 and you submit a market order to buy. If your trade is eventually filled at 1.0853, the 3-pip difference between the expected price and actual fill represents 3 pips of negative slippage. If you instead receive 1.0847, the same 3-pip difference would be positive slippage. 

Is 0.5% slippage good? 

There is no universal threshold that makes 0.5% slippage good or bad because the significance depends on the asset, order size, market conditions and strategy. For a short-term strategy targeting small price movements, 0.5% could represent a substantial execution cost, whereas its significance may differ for a longer-term position. 

Why is my slippage so high? 

High slippage can result from rapid volatility, thin liquidity, market openings, weekend gaps, major economic announcements or an order that is large relative to the available market depth. Latency can also contribute, particularly when an automated strategy is attempting to execute while prices are changing rapidly. 

Can slippage be positive? 

Yes. Positive slippage occurs when your order is filled at a better price than the one you expected. For example, if you intend to buy EUR/USD at 1.0850 but receive an execution at 1.0847, you have received 3 pips of positive slippage because you bought at a lower price than expected. 

Does slippage affect limit orders? 

A properly executed limit order should not fill at a price worse than the specified limit, which is why limit orders provide greater price protection. However, the market may never reach your limit, or it may move through the level too quickly for the order to be filled, leaving you without an execution.