Slippage in forex trading
If slippage is always negative and high then it may be a problem with the broker.
Avoiding Slippage in Forex
Whenever orders are executed, the corresponding parties liquidity providers buy or sell a currency pair at the best and most favorable available price. There can be 3 outcomes to executing an order: Positive slippage - The order is executed at a better price. No slippage - The order is executed at the requested price.
Negative slippage - The order is executed at a worse than the requested price. Since prices in the Forex market often change rapidly, slippage is not an uncommon situation.
Slippage Definition | Forexpedia by
However, normally it is not a big problem as long as the slippage is low. In comparison in other less liquid markets, when it occurs, slippage is usually larger.
There are, however, some measures that can be taken to minimize and even avoid slippage in FOREX trading: Always be informed of any scheduled high-impact news events, like non-farm payrolls and interest rate decisions. These events will have a high impact the respective currency pairs and are likely to cause high volatility which in turn often results in higher slippage.
SLIPPAGE POLICY
Always check on the fundamental background of the currency pair you trade. Gaps sometimes result in corrective price action. If there is a gap, generally that is a signal to stay out of the market.
If there is a gap immediately before the entry of a trade, it may be wise to cancel the trade. Slippage is the difference between the expected price of a trade and the price at which the trade actually executes. Market gaps can cause slippage which may affect stop and limit orders — meaning they will be executed at a different price from that requested.
What Is Slippage?
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Understanding Market Gaps and Slippage. What are Gaps?