Market Mechanics Algorithmic & Financial Definition

Slippage

Quick Definition

The difference between the expected execution price of an order and the actual price at which the order is filled by the broker.

Detailed Explanation

Slippage occurs during high-volatility news events (e.g. CPI, NFP) or low-liquidity market roll-overs when orders cannot be matched at the requested quote. Positive slippage benefits the trader, while negative slippage widens the realized loss.

Key Trading Rules & Takeaways

  • Common during high-impact macroeconomic releases and session opens.
  • Can be minimized by utilizing ECN brokers with Tier-1 liquidity providers.
  • Algorithmic EAs must configure maximum allowable slippage parameters.
Interactive Tool

Calculate & Automate Slippage

Eliminate manual calculations and enforce automated risk controls with our specialized tools.

Check Market Liquidity Hours →

Frequently Asked Questions

How do EAs handle slippage?

EAs use a `MaxSlippage` parameter (in points) that rejects execution if the broker fill deviates beyond the acceptable limit.

Related Trading Terms

Market Mechanics

Pip Value

The monetary gain or loss generated by a one-pip price movement for a specified lot volume in a currency pair or commodity.

 Market Mechanics

Forex Leverage

The ratio of borrowed funds provided by a broker that enables a trader to control larger market positions with a smaller upfront deposit.

 Market Mechanics

Average Daily Range (ADR)

The average number of pips or price distance an asset moves between its daily high and daily low over a specified period (e.g. 14 or 20 days).

 Prop Firms

Maximum Daily Drawdown

The maximum permissible equity or balance drop allowed within a single trading day, calculated either from the previous day's balance or equity high watermark.
TX

Loading activity...

Just now