In financial markets, especially during high volatility or low liquidity conditions, trade orders may be executed at a price different from the requested price. This phenomenon, known as slippage, can affect trading outcomes.
Slippage occurs when a trader’s order is executed at a price different from the expected price. This difference may be caused by rapid market price changes or delays in order execution.
Positive Slippage: Occurs when the order is executed at a better price than requested, potentially resulting in higher profits for the trader.
Negative Slippage: Occurs when the order is executed at a worse price than requested, which may lead to increased losses.
Market Volatility: The likelihood of slippage increases during periods of high market fluctuations.
Low Liquidity: In markets with low trading volumes, orders may experience delays, resulting in slippage.
Order Execution Type: Slippage is more likely with Market Execution compared to Instant Execution.
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