Slippage is the difference between the price you expected when you sent an order and the price at which the order was actually filled. It happens because prices move, or available liquidity changes, between the moment an order leaves your platform and the moment the broker or liquidity provider executes it. Slippage can be negative (a worse price) or positive (a better price). In Forex it is usually measured in pips or points and is a real trading cost, alongside the spread and commission.
Slippage meaning in trading: a simple example
You send a market order to buy 1 standard lot (100,000 units) of EUR/USD when the platform shows an ask of 1.10000. By the time the order reaches the execution venue, the best available ask is 1.10003, and that is where you are filled.
- Expected price: 1.10000
- Fill price: 1.10003
- Slippage: 0.3 pips against you (pip size 0.0001)
- Cost: about $3 on 1 standard lot, where 1 pip is worth roughly $10
The same 0.3 pips on 10 trades a day adds about $30 of cost that never appears as a separate fee on the statement. This is why active traders track slippage as carefully as spreads.
How to calculate slippage on buy and sell orders
Use one sign convention and keep it in every report. A common convention is that a positive number means slippage against the trader:
- Buy order: slippage (pips) = (fill price − expected price) ÷ pip size
- Sell order: slippage (pips) = (expected price − fill price) ÷ pip size
- Partial fills: use the volume-weighted average fill price. If half the order fills at 1.10002 and half at 1.10004, the average fill is 1.10003.
- Reference price: record which price you used as “expected”: the quote on screen when you clicked, the price in your signal, or the requested price sent with the order. Results are only comparable when the reference is the same.
What causes price slippage in Forex
- Volatility: during news releases, central-bank decisions and market opens, quotes can change several times between order submission and execution.
- Liquidity at the requested price: if there is not enough volume at the best price, the rest of the order fills at the next available levels. Larger orders and less traded pairs are more exposed.
- Execution latency: every millisecond between your terminal, the broker’s server and the liquidity provider is time for the price to move. See execution latency.
- Gaps: over weekends or after major news the market can open far from the last price, so stop-loss orders fill at the first available price.
- Broker execution settings: dealing-desk plugins, artificial execution delays and asymmetric slippage settings can all change your fill price. These are covered in the regulatory section below.
Positive vs negative slippage
| Type | What happens | Buy order example (expected 1.10000) | Effect on trader |
|---|---|---|---|
| Negative slippage | Fill at a worse price than expected | Filled at 1.10003 | Higher cost or smaller profit |
| Positive slippage (price improvement) | Fill at a better price than expected | Filled at 1.09998 | Lower cost or larger profit |
| Zero slippage | Fill exactly at the expected price | Filled at 1.10000 | No extra cost |
A fair execution model passes both negative and positive slippage to the client. If your fills show negative slippage regularly but positive slippage almost never, the cause may be the broker’s execution settings rather than the market.
Slippage vs spread vs requote
| Term | What it is | When you see it | Known in advance? |
|---|---|---|---|
| Spread | Difference between bid and ask | Before you trade, on the quote | Yes |
| Slippage | Difference between expected price and fill price | After the order is filled | No |
| Requote | The broker refuses the requested price and offers a new one | Before the fill, as a new price you must accept or reject | Partly: the order is not filled until you accept |
With market execution, the order is filled at the next available price, so you get slippage instead of a requote. With instant execution, a price change usually produces a requote.
Stop-loss slippage and order types
- Market orders: filled at the best available price, so they are fully exposed to slippage in both directions.
- Stop and stop-loss orders: become market orders when the trigger price is touched. In a fast market or after a gap, a stop-loss can fill well beyond its level.
- Limit orders: fill only at the limit price or better, so they cannot slip against you, but they may not be filled at all.
- Maximum deviation (slippage tolerance): many platforms, including MetaTrader 4/5, let you set the maximum deviation in points. Orders that would fill outside this range are rejected instead of filled.
Regulatory view: best execution and asymmetric slippage
In the EU, Article 27 of MiFID II requires investment firms to take all sufficient steps to obtain the best possible result for clients, taking into account price, costs, speed and likelihood of execution. In its Q&A on CFDs and other speculative products, ESMA stated that applying asymmetric slippage, where negative price moves are passed to the client but positive ones are not, indicates that a firm is not taking all reasonable steps to avoid conflicts of interest.
Regulators have acted on this. In 2014 the UK FCA fined FXCM UK and required client redress over asymmetric price slippage on rolling spot Forex trades, and then ran a thematic review of best execution across around 40 firms. In 2018 the Polish regulator KNF fined XTB, finding that it had not passed on positive price movements between order receipt and execution. Before choosing a broker, read its order execution policy and check whether positive slippage is passed on to clients.
How to reduce slippage
- Trade liquid pairs at liquid hours: majors during the London and New York sessions usually have the deepest liquidity.
- Avoid the first seconds after major news: spreads widen and quotes jump.
- Use limit orders when the exact price matters: accept the risk of not being filled.
- Set a maximum deviation: reject fills outside the range you accept.
- Reduce latency: host the terminal on a VPS close to the broker’s server and use a direct connection such as FIX API where available.
- Measure, don’t guess: log the expected price, fill price and timestamps for every order, then compare average and worst-case slippage by broker, symbol and session.
Slippage in latency arbitrage
In latency arbitrage, the expected price is the quote from a fast price feed, and the fill comes from a slower broker. Slippage therefore decides whether a detected price difference is still there at the moment of execution. Repeated negative slippage, especially when positive slippage never appears, may also mean that the broker applies a dealing-desk plugin or delay to the account.
Westernpips Private 7 includes a Slippage Control module. It compares the signal price with the actual fill, counts trades that exceed a set limit in points, and pauses trading when the limit is exceeded too often. This keeps execution problems visible and limits further losses on that connection; it does not remove slippage itself.
FAQ about slippage
Is slippage a fee?
No. Slippage is not charged as a separate fee, but it changes your fill price, so it works like a hidden trading cost and should be counted together with spread and commission.
Can slippage be avoided completely?
Not with market or stop orders. Limit orders prevent negative slippage but may not be filled. You can reduce slippage, but not remove it.
What is a normal amount of slippage in Forex?
There is no single number. It depends on the pair, the time of day, order size and the broker’s execution model. Measure the average and worst-case slippage on your own fills and compare brokers on the same symbols and sessions.
Is positive slippage a good sign?
Yes, regular positive slippage alongside negative slippage suggests the broker passes price moves to the client in both directions, as best-execution rules expect.
Risk warning: Leveraged trading in Forex and CFDs can result in losses that exceed your initial expectations. Slippage, gaps and requotes can occur on any account and with any software. This article is for educational purposes only and is not investment advice.