Slippage
The difference between the price you expected and the price you actually got.
Also called: slip · bad fill
In plain language
Slippage happens when the market moves, or the book thins out, between your decision and your fill. It can go in your favor, but it usually does not.
It is worst exactly where it hurts most: on stop orders during fast moves. A stop is a trigger, not a guarantee, and once triggered it becomes a market order that takes whatever is available.
Gaps are slippage in its most extreme form. If an instrument closes at $50 and opens at $42, a stop at $48 fills near $42.
Why it matters
Your calculated maximum risk assumes the stop fills at the stop price. Slippage is the gap between that assumption and reality, and it is the main reason to keep per-trade risk modest.
Common mistakes
- Believing a stop loss caps risk at exactly the stop price.
- Holding through scheduled events like earnings with a tight stop that a gap can leap over.
- Using market orders in thin conditions when a limit order would do.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A predefined exit that closes a losing trade before the loss becomes serious.
How easily an asset can be bought or sold without moving its price.
The gap between the bid and the ask — the built-in cost of entering a trade.
A jump between one period’s close and the next period’s open with no trading in between.
An instruction to buy or sell immediately at the best price currently available.