# What Is Slippage and How It Affects Your Trades

> Slippage is the difference between your intended trade price and your actual execution price. Here is what causes it and how to minimize its impact.

**Tags:** slippage, execution, forex-basics, trading-costs
**URL:** https://traderjournal.app/forex-basics/what-is-slippage-and-how-it-affects-your-trades

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# What Is Slippage and How It Affects Your Trades

Slippage occurs when your trade executes at a different price than you intended. If you try to buy EUR/USD at 1.0850 and your order fills at 1.0853, you experienced 3 pips of negative slippage.

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## What Causes Slippage

**Market movement between order and execution.** From the moment you click "buy" to the moment the order is received and filled by the broker's system, the market may have moved. In normal conditions, this is milliseconds and barely noticeable. During fast-moving markets, even milliseconds produce significant price differences.

**News events.** The most significant source of slippage for retail traders. During high-impact news releases, prices can move 20-50 pips in under a second. If your stop loss is near the price when the news hits, it may execute 10-20 pips past your intended level.

**Low liquidity periods.** During the Asian session on European pairs, or late on Fridays, there are fewer participants and wider gaps between available prices. Orders fill at the next available price, which may be worse than intended.

**Market orders vs limit orders.** Market orders execute at the current available price, which may differ from what you saw when you clicked. Limit orders specify the exact price you are willing to accept, avoiding negative slippage (though the order may not fill if price moves away).

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## Types of Slippage

**Negative slippage:** Your execution price is worse than intended. Buys fill higher than expected, sells fill lower. This is the common type.

**Positive slippage:** Your execution price is better than intended. Can occur in your favor when market conditions move your direction between order submission and execution. Less common but real.

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## How Slippage Affects Your Strategy

For strategies with small targets (scalpers in particular), slippage is a significant cost. A 3-pip slippage on a 5-pip target represents a 60% reduction in gross profit.

For swing traders with 50-100 pip targets, 2-3 pips of average slippage represents 2-6% of potential profit - meaningful but less critical.

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## Minimizing Slippage

**Trade during high-liquidity sessions.** London and London-New York overlap sessions have the tightest spreads and smallest slippage for major pairs.

**Avoid trading immediately before and after news releases.** If you are not a news trader, close positions or widen stops before major releases.

**Use brokers with fast execution.** ECN brokers with direct market access typically produce less slippage than market makers.

**Use limit orders for entries when possible.** Limit orders guarantee your fill price (or better). They may not always fill, but when they do, there is no negative slippage on entry.

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