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What is slippage and why does it happen?

Slippage is a factor when trading any financial market.
 
Slippage occurs when the market gaps over prices or because available liquidity at a given price has been exhausted. Market gaps normally occur during fast moving markets when a price can jump several pips without trading at prices in between. Similarly, each price has a certain amount of available liquidity. For instance, if the price is 50 and there is 1 million available at 50, then a 3 million order will get slipped, since 3 million is more than the 1 million available at the price of 50.
 
Slippage can be negative or positive. To learn more about positive slippage, watch the video below.

VIDEOHow do Price Improvements Work? (02:21)


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