CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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What is slippage and how does it affect my trades?
Slippage is the difference between the expected and actual trade price, often occurring during high volatility or low liquidity. It can be positive (better price) or negative (worse price). Slippage impacts trading performance and, while some strategies may reduce it, it cannot be completely avoided.
How slippage works
Situation
Example
Buy order
You place a buy order at a certain price, but the market moves before execution. The order may be filled at a higher or lower price.
Sell order
You place a sell order at a certain price, but the market moves before execution. The order may be filled at a lower or higher price.
Types of slippage
Type
Meaning
Positive slippage
Your order is executed at a better price than expected.
Negative slippage
Your order is executed at a worse price than expected.
When slippage may occur
Market condition
Explanation
High volatility
Prices may move rapidly before the order is executed.
Low liquidity
There may not be enough buyers or sellers at the expected price.
Market gaps
Price may jump from one level to another without trading at every price in between.
News events
Major announcements may cause sudden price movement.
Important notes
Slippage is a normal part of trading and cannot be fully avoided.
Slippage may be positive or negative.
Risk management tools may reduce risk, but they do not guarantee execution at the requested price.
