What percentage of orders are executed with slippage?
When you see a price on your broker’s trading platform and want to trade on that price, your broker is supposed to exert every effort to fill your order at that requested price.
When executing orders, the broker has an obligation to take ALL sufficient steps to get the best possible result for their customers considering multiple factors.
We know this as striving for “best execution“.
Ideally, getting the “best possible result” means getting the price you requested.
But while the price is the most important factor when considering the best execution, it’s not the ONLY factor.
This means that the price you wanted may not be the price we executed your order at.
Whenever you are filled at a price different from the price requested, it’s called “slippage“.
Traders typically focus more on the spread.
While doing this, they largely ignore slippage unless the slippage is blatantly obvious when one of their orders is filled
Slippage isn’t necessarily something that’s bad.
ANY difference between the intended execution price and the actual execution price qualifies as slippage.
Market prices can change quickly, allowing slippage during the delay between a trade order being processed and when it is completed.
Slippage can occur for many reasons, but price volatility is often the biggest reason.
As price volatility increases, slippage (both positive and negative) occurs more frequently. As price volatility decreases, slippage occurs less frequently.
This is why traders typically see more slippage during high periods of volatility, such as during breaking news or economic data releases or when a former U.S. president used to fire off a random tweet before his account was suspended.
Under normal market conditions, if your broker cares about execution quality, occurrences of slippage should be infrequent and the magnitude of slippage should be minimal.
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