What is slippage?
Slippage occurs when an order is executed at a price different from the one you expected. This usually happens during periods of rapid price movement or high volatility. Because prices can change within milliseconds, the execution price may shift between the time an order is triggered and the time it is filled.
Slippage is driven by two factors:
The order type you choose
The market conditions at the time
Why does slippage happen?
Slippage occurs when there is not enough liquidity available at your desired price, or when aggressive buying/selling pushes the market past it. In fast-moving markets, your order may be filled at the next best available price.
How do stop-loss orders react to slippage?
Stop-loss orders turn into market orders once the stop price is reached. Market orders guarantee a fill but not the price. If volatility is high, the execution price may differ from your stop price, creating a larger-than-expected loss.
Stop-Loss vs. Stop-Limit Orders
Stop-Loss (Stop Market) Order: Converts into a market order at the stop price. It will fill at the best available price, but may incur slippage—especially in volatile markets.
Stop-Limit Order: Converts into a limit order at the stop price and will only execute at the specified limit price or better. This reduces slippage risk but comes with the possibility of not being filled at all—leaving you exposed if the market keeps moving against you.
Can slippage be avoided?
Not entirely. Stop-limit orders can prevent slippage but carry the risk of no fill. Traders should prioritize risk protection with stop orders while understanding the limitations of each order type.
Other ways to reduce slippage:
Avoid trading during major News Events that cause rapid moves.
Focus on times of high market liquidity (e.g., regular trading hours).
Can slippage affect both buys and sells?
Yes.
Buy orders: Filled at a higher price than expected.
Sell orders: Filled at a lower price than expected.
Does Slippage happen across all types of markets?
Yes. Slippage can happen in futures, stocks, Forex, and crypto—any market with liquidity gaps or volatility.
When am I most exposed to slippage?
Slippage is most common during:
News Events (unemployment reports, FOMC, etc.)
High volatility periods
Illiquid markets / low depth
Market opens and closes
Swing highs, swing lows, and breakout moves
Main Causes of Slippage
Market Volatility – Rapid price moves create execution delays.
Liquidity – Thin order books make it harder to execute large orders at a specific price.
Market Gaps – Overnight or weekend events may cause prices to open at a completely different level.
Ways to Avoid or Reduce Slippage
Use Limit Orders – Control your execution price, but understand you may not always get filled.
Stay Vigilant – Monitor conditions and step aside during extreme volatility.
Risk Management – Always size positions and stops according to your tolerance. Never risk more than you’re prepared to lose.
Common Trader Questions
Why wasn’t my order filled?
If liquidity is low or volatility is high, your order may not find a counterparty at your price. Market orders will fill at the next available level, while limit orders may remain unfilled.
Why did the market blow past my stop?
During volatile periods or market gaps, your stop-loss may be triggered at a worse price than expected. This is slippage in action. Review your plan and consider adjusting stops to better fit current conditions.
How can I tell if I experienced slippage?
Compare your executed price to your intended entry/exit.
Check whether you used a market or limit order.
Review market conditions at the time (volatility, gaps, low liquidity).
Look at fill times—execution delays often signal slippage.
⚠️ Remember: Slippage is a normal part of futures trading. With sound risk management, traders can limit its impact but should never assume it can be fully eliminated
What is Slippage in the Futures Markets?
News Events in the Futures Markets