What is slippage in trading?
What slippage is, why it happens, how it differs from a requote, and how to reduce it in forex and crypto through better execution quality and risk management.
- Educational article
- ~9 min read
- BrokerLauncher content team
Slippage is not always negative and can also be positive; however, it is usually more frequent under heavy volatility.
Slippage is one of the core concepts of order execution and is seen across all markets, from forex to crypto. Slippage occurs when the executed price of an order differs from the price seen when the request was sent.
This article explains in educational terms what slippage is, why it happens, how it differs from a requote, what role the broker and liquidity play, and how risk management and a better infrastructure can reduce its impact.
This article is purely educational and should not be interpreted as trading or financial advice, nor as a guarantee of execution quality.
What is slippage?
Slippage is the difference between "the requested entry price" and "the price actually executed by the broker/platform." It can range from fractions of a pip to several pips or more, and usually results from the price changing between order submission and execution.
A simple example
Suppose EUR/USD is priced at 1.10500 and you place a Buy request. Due to instant market volatility, the order is executed at 1.10512. The 1.2-pip difference between these two prices is the slippage.
Why does slippage happen?
Slippage is the result of several factors acting at once, and in most cases one or more of the following plays the leading role:
Market volatility
During highly volatile periods, the price changes between order submission and execution, causing slippage.
Market liquidity
In illiquid markets, large orders can sweep multiple price levels and shift the average fill price.
Order execution delay
Delays in server processing, internet connection, and geographic distance can extend execution time.
Server latency
Network latency between client and broker server is a main source of slippage in fast strategies.
Price gaps
Market opens or unexpected news releases can create gaps where orders execute at a different price.
Broker routing
How the order is routed (internally or to an LP) and how it is filled affects the amount of slippage.
Positive and negative slippage
Positive slippage
The order is executed at a better price than requested — for example, a Buy at a lower price or a Sell at a higher price than requested. This usually improves trade profit.
Negative slippage
The order is executed at a worse price than requested — for example, a Buy at a higher price or a Sell at a lower price. It is most often seen during volatility and news.
In a fair execution environment, slippage should be two-sided: both positive and negative slippage occur for the user. A one-sided bias against the user can signal a weakness in the broker's execution quality.
Slippage vs requote
These two concepts are often confused, but they are not the same thing.
| Criterion | Slippage | Requote |
|---|---|---|
| Definition | The order executes at a price different from the requested price. | The broker rejects the requested price and offers a new one. |
| User experience | The trade executes; only the execution price differs from the request. | The trade is not executed until the user confirms the new price. |
| When it happens | Mainly on market orders and in volatile conditions. | Mainly on older platforms or under limited execution models (Instant Execution). |
| Effect on strategy | Can slightly change profit/loss. | Time is lost and the trading opportunity may be missed. |
Definition
Slippage: The order executes at a price different from the requested price.
Requote: The broker rejects the requested price and offers a new one.
User experience
Slippage: The trade executes; only the execution price differs from the request.
Requote: The trade is not executed until the user confirms the new price.
When it happens
Slippage: Mainly on market orders and in volatile conditions.
Requote: Mainly on older platforms or under limited execution models (Instant Execution).
Effect on strategy
Slippage: Can slightly change profit/loss.
Requote: Time is lost and the trading opportunity may be missed.
Role of the broker and liquidity in slippage
Execution quality and the amount of slippage depend heavily on the broker and LP infrastructure. This is not just marketing language — it is a technical reality that can be explained educationally.
LP connectivity
Brokers connected to reputable liquidity providers usually have more stable slippage under normal conditions.
Order routing
How an order is routed (internally or via STP) directly affects the fill price.
Market depth
The deeper the market, the lower the chance of slippage caused by missing liquidity.
Spread quality
A healthy floating spread can signal a better LP connection; unrealistic spreads are not a reliable indicator.
Liquidity Provider for forex brokers
Slippage during economic news
During major releases such as NFP, CPI, FOMC, and central-bank decisions, volatility typically rises, market depth falls, and the chance of significant slippage increases.
What changes during news?
- · Sharp rise in volatility
- · Reduced market depth in the moment
- · Wider spreads in real time
- · Risk of price gaps
- · Higher broker server response time
Risk management note
Many traders avoid taking new positions or holding heavy ones in the minutes around major news in order to limit the risk of slippage, gaps, and stop-loss hunting.
The most important forex economic news
How to reduce slippage
You cannot reduce slippage to zero, but you can sharply cut its impact with better infrastructure, order management, and risk management:
Use a VPS
A VPS close to the broker's data centre reduces network latency and lets orders execute faster.
Use limit orders
A limit order executes only at the specified price or better, preventing severe negative slippage.
Avoid heavy volatility
Entering in the first minutes of a major news release is one of the most slippage-prone moments of the market.
Pick a broker with stable LPs
Brokers connected to reputable LPs offer more reasonable slippage in normal conditions — not 'zero'.
Manage position size
Larger orders cause more slippage in illiquid markets.
Max-deviation settings
Some platforms let you set a maximum allowed deviation so that orders with excess slippage are rejected.
Is slippage always bad?
No. Slippage is a natural part of the market and exists on every exchange and broker. Positive slippage can benefit the trader, and negative slippage, if it stays within a reasonable range, is a sign that market prices are real.
What is unusual?
Slippage by itself is not a problem; the problem arises when it is one-sided (always against the user) or abnormally large under normal market conditions. In such cases, reviewing the broker's execution quality, routing, and LP matters.
A natural part of the market, not the trader's enemy
Slippage is a natural phenomenon in market order execution that can be positive or negative and is more visible in volatile, illiquid, or news-driven conditions. By choosing a stable infrastructure, using limit orders in sensitive conditions, a VPS, and risk management, you can keep its impact largely under control — but you should never trust promises of "execution without slippage."
Frequently asked questions about slippage
Liquidity Provider
The LP's role in market depth and execution quality.
Launching a forex broker
Full broker infrastructure, from platform to risk and dealing.
Instrument grouping
The role of Symbol Groups in risk and order execution.
MetaManager
The tool for managing users, accounts, and routing in MT5.
Forex dealer training
Behind the scenes of dealing and order execution control.
Forex broker regulation
The regulatory framework and execution requirements.
Order-execution infrastructure: more than just price
Execution quality depends on a combination of LP, routing, CRM, MetaManager, and risk management. If you are launching a broker, you can review BrokerLauncher's related services.