Slippage
Definition
Slippage occurs when an order is executed at a different price than expected, typically during high volatility or low liquidity. It can cause your stop loss to fill at a worse price than set, increasing your actual loss.
Slippage is a reality of trading that affects both entries and exits. When you place a market order or when a stop loss is triggered, the execution price may differ from the expected price. Positive slippage (better price) is possible but negative slippage (worse price) is more common during fast-moving markets.
For prop traders, slippage is particularly dangerous because it can cause losses that exceed your planned risk. If you have a 20-pip stop loss but experience 5 pips of slippage, your actual loss is 25 pips — a 25% increase in risk for that trade. In extreme cases (news events, flash crashes, weekend gaps), slippage can be much larger.
To minimize slippage: trade liquid instruments during peak hours, use limit orders for entries when possible, avoid trading during high-impact news events, and account for potential slippage in your position sizing. PropJournal tracks actual vs. expected fill prices to help you quantify your slippage costs.
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