Unveiling Forex Slippage: A Guide for Savvy Traders

Understanding Forex Slippage

What is Slippage?

Forex slippage occurs when a trade order is executed at a price different from the requested price. This can happen during periods of high volatility or when orders cannot be matched at desired prices.

Examples of Slippage

1. No Slippage: The order is filled at the requested price.

2. Positive Slippage: The order is filled at a better price than requested.

3. Negative Slippage: The order is filled at a worse price than requested.

Causes and Avoidance of Slippage

Forex slippage arises due to imbalances in buyers and sellers in the market. If there aren’t enough sellers at the requested price, orders may be filled at a higher price, resulting in negative slippage. Conversely, a surplus of sellers can lead to positive slippage. Utilizing guaranteed stop losses can mitigate the risk of slippage, albeit with additional charges.

Currency Pairs Least Prone to Slippage

Highly liquid pairs like EUR/USD and USD/JPY are generally less susceptible to slippage under normal market conditions. However, during periods of volatility, even these pairs can experience slippage, especially around significant news or data releases.

Further Resources

Live Trading Webinars: 

Join free webinars covering various forex market topics.

Risk Management: 

Learn about effective risk management strategies to protect your capital.

Traits of Successful Traders:

Discover the characteristics of successful forex traders.

Forex Entry Orders: 

Explore different order types to gain a comprehensive understanding of slippage and its implications in forex trading.