What is Slippage?
Slippage is the difference between the price a trader expects when placing an order and the price at which it actually executes. Slippage is common during news releases, market open/close, and on illiquid instruments. Prop firms apply real-market slippage on simulated-live accounts, which can convert a winning trade into a stop-loss hit if entry slipped by several pips. Slippage is one reason prop firm performance often underperforms backtested strategy results.
Key takeaways
The difference between expected and actual execution price.
Slippage is one reason prop firm performance often underperforms backtested strategy results.
Prop firms apply real-market slippage on simulated-live accounts, which can convert a winning trade into a stop-loss hit if entry slipped by several pips.
Slippage vs. Spread
Two terms that frequently get conflated. Here's how they actually differ.
SlippageMarket Mechanics · PRO
SpreadMarket Mechanics · PRO
The difference between expected and actual execution price.
The difference between bid and ask prices.
Frequently asked questions
What is Slippage?
Slippage is the difference between the price a trader expects when placing an order and the price at which it actually executes. Slippage is common during news releases, market open/close, and on illiquid instruments. Prop firms apply real-market slippage on simulated-live accounts, which can convert a winning trade into a stop-loss hit if entry slipped by several pips.
Why does Slippage matter for prop firm traders?
Slippage is one of the building blocks of how markets and trading actually work. Without a clean mental model of it, position sizing, risk calculations, and rule-compliance all break down.
How is Slippage different from Spread?
Slippage and Spread are commonly confused. Slippage: The difference between expected and actual execution price. Spread, by contrast: The difference between bid and ask prices.
What should traders watch out for with Slippage?
Prop firms apply real-market slippage on simulated-live accounts, which can convert a winning trade into a stop-loss hit if entry slipped by several pips. Slippage is one reason prop firm performance often underperforms backtested strategy results.