Slippage (forex slippage).

When trading on the forex or stock exchange, unpleasant situations often arise that significantly complicate a trader's work and sometimes lead to losses.
Price slippage is one such situation.

Slippage (forex slippage) is the execution of an order at a price different from the current quote. It can have either a positive or negative value depending on the trend direction and the type of position being opened.

The easiest way to understand this event is by looking at a specific order.

You open a buy order at 1.2500, and the market is currently trending upward. However, instead of the requested price, a slippage occurs, and a new position opens at 1.2505, five pips further than you expected, thereby reducing your potential profit.

Slippage in Forex can also be positive. In this case, in our example, the quote would have opened at 1.2495, meaning we would have bought 5 pips cheaper. However, such scenarios are extremely rare; more often, the broker will reject the position ( requote ).

Reasons for slippage in Forex.

The main reasons why orders are executed at prices different from those presented in the quote are:

• High market volatility - the price changes so quickly that a new order simply does not have time to open at the bid price.

• Slow order execution - the reverse side of the previous option, when slippage occurs due to the slow operation of the broker or the occurrence of communication failures when transmitting an order to open a position.

• Due to the fault of the broker - dishonest brokerage companies ( forex kitchens ) often deliberately delay the execution of orders, opening them at a more unfavorable price for the trader.

It should be noted that the occurrence of slippage is actually a violation on the part of the broker, since if market prices do not match, the broker is obliged to re-request the trader's consent to open a new position at the changed price.

Price slippage is more common when using market execution. In the best-case scenario, brokers allow you to set a maximum deviation from the market price, while in the worst-case scenario, slippage can amount to several dozen pips.

To minimize this occurrence, it's advisable to choose accounts with Instant Execution . If the market price no longer matches the order price, you'll simply be rejected and asked to enter the market at a new price.