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 the execution, please click here.