Forex Slippage refers to the difference between the expected price of a trade and the price at which the trade is executed. It can occur at any time but is most prevalent during periods of higher volatility when market orders are used. It can also occur when a large order is executed but there isn’t enough volume at the chosen price to maintain the current bid/ask spread.
Typically, when you place a buy or sell order with your broker, you expect it to be filled at your chosen price. But when a market is experiencing slippage, the bid/ask spread changes between the time your broker submits the order and when an exchange or market maker executes it, resulting in a different price.
Market prices can change quickly, allowing slippage to occur during the delay between a trade being ordered and when it is completed. The term is used in many market venues but definitions are identical. However, slippage tends to occur in different circumstances for each venue.
Slippage does not denote a negative or positive movement because any difference between the intended execution price and actual execution price qualifies as slippage. The final execution price vs. the intended execution price can be categorized as positive slippage, no slippage, or negative slippage.
Slippage occurs in all market venues, including equities, bonds, currencies, and futures.
What Is Price Slippage?
Price slippage is the term that describes instances when traders have to settle for a different price than what they initially requested due to the underlying market changing in value quickly.
It’s important to understand Forex slippage because it can impact your trading costs, alongside other fees. Slippage occurs when there is either low liquidity in a market – meaning there are fewer participants to take another side of a trade causing delays – or high volatility, causing prices to change rapidly.
Slippage tends to occur more frequently around large market-moving events – such as central bank announcements – or when earnings are released outside of trading hours, which can cause the market to change price overnight and potentially gap upon opening.
Forex Slippage
Although slippage can occur in all financial markets, it’s more common in forex as currency prices are prone to higher levels of volatility. However, slippage is less common in major currency pairs, such as EUR/USD, GBP/USD and USD/JPY, given that they have extremely high liquidity.
You have probably read or heard the term Forex slippage, but what does it mean, what does it reveal about the Forex market and Forex brokers, and how can you avoid it?
The Forex market is the most liquid market, with daily turnover exceeding $7.5 trillion in 2025, making Forex slippage a non-factor in major currency pairs at Forex brokers offering deep liquid pools.
Slippage in Forex is a non-factor in 99.9% of trades if traders use an ECN (Electronic Communication Network), STP (Straight Through Processing), and NDD (No Dealing Desk) Forex broker that connects to multiple liquidity providers. Brokers using the market maker model experience Forex slippage more frequently, as they often lack access to deep liquidity and dark trading pools. Minor and exotic currency pairs will experience negative Forex slippage occasionally, but major currency pairs should never have Forex slippage beyond one to three pips.
Positive vs Negative Slippage
Slippage can either work for or against your position because there are two types: negative and positive slippage.
Negative slippage is the name for when the price difference gives you a worse rate than intended. For example, if the price is higher than the expected price for a long position, or lower than the expected price for a short position.
Positive slippage is the name for an advantageous price difference. For example, if the price is lower than expected for a long position, or higher than expected for a short position.
Here is an example of positive Forex slippage:
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A Forex trader places a EUR/USD buy order at 1.1195
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Their Forex broker executes the order at 1.1189
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The executed price is 0.6 pips better than the order price, which is $6.00 per 1.0 standard round lot (usually only if cutting-edge price improvement technology exists and the Forex broker has 20+ liquidity providers).
Here is an example of negative Forex slippage:
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A Forex trader places a EUR/USD buy order at 1.1195
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Their Forex broker executes the order at 1.1201
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The executed price is 0.6 pips worse than the order price, which is $6.00 per 1.0 standard round lot (Forex slippage on major currency pairs is a significant red flag, suggesting a lack of liquidity providers, an inadequate trading infrastructure, or a simulated, manipulated trading environment)
How to Reduce or Avoid Slippage in Trading
Slippage is a normal part of trading, so it’s not completely avoidable. But there are a few ways you can minimise your risk of slippage in trading. For example, you could avoid large market-moving events, opt to trade on lower volatility markets or those with higher liquidity.
Slippage usually occurs when markets are volatile or liquidity is lacking, so timing and the type of security you’re trading can play a big role.
Forex traders can follow some basic trading guidelines to avoid Forex slippage. We recommend traders consider our observations as below.
Tips on avoiding or reducing slippage:
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Only trade with Forex broker that have access to deep liquidity
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Avoid Forex brokers acting as market makers
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Use limit orders versus market orders, but check your broker’s execution policy on slippage
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Avoid trading during high-volatility events like economic news releases e.g. CPI m/m, CPI y/y, FOMC economic projections
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Avoid trading illiquid currency pairs
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Trade highly liquid assets during low volatility periods
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Trade with broker that execute orders in less than 30 milliseconds
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Use ECN (Electronic Communication Network), STP (Straight Through Processing), and NDD (No Dealing Desk) communication, order execution, and post-processing Forex brokers
Noteworthy:
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In extreme market events, Forex slippage is unavoidable, but they usually happen once or twice per year.
Trade in calm moments. The less volatility in the market, the less chance you have of getting caught out by slippage. If you want to limit slippage, don’t invest around the time of major economic announcements or important updates relating to a security you wish to trade, such as an earnings report.
Use Limit and Guaranteed Stop Orders
While a limit order prevents negative slippage, it carries the inherent risk of the trade not being executed if the price does not return to the limit level. This risk increases in situations where market fluctuations occur more quickly, significantly limiting the amount of time for a trade to be completed at the intended execution price.
Limit orders are instructions to execute a position at a price that is more favourable than the current market price. So, your order will be filled at the specified price or better, meaning slippage doesn’t apply. For a sell (short) order this would be at the desired price or a higher price, whereas for a buy (long) it would be at the specified price or a lower price.
Guaranteed stop-loss orders (GSLOs) are free to attach, but you will be charged a premium if your order is triggered. A guaranteed stop loss is an order that closes your trade at the exact level chosen by you, regardless of price slippage. A regular stop loss may incur slippage in times of heightened volatility but with a guaranteed stop, we take on the risk of slippage for you.
Slippage Tolerance and Examples
Traders can set a slippage tolerance, but we urge caution. The best Forex brokers have zero to near-zero slippage.
Here is an example of slippage tolerance:
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A trader places a EUR/USD buy order at 1.1150 with a 5-pip slippage tolerance
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Therefore, the Forex broker will execute the buy order anywhere between 1.1145 and 1.1155
Some platforms allow investors to place an order while specifying the maximum amount of slippage they are willing to accept in percentage terms.
A 2% slippage means an order being executed at 2% more or less than the expected price. For example, if you placed an order for shares in a company when they were trading at $100 and ended up paying $102 per share, you would have a 2% negative slippage.
With some broker, you can amend your price tolerance level in the market information section for each asset. And if you want to remove the tolerance completely, you can set it to zero. But if the execution price moves, your order will fail, and you’ll have to submit a new request.
Slippage Across Markets
Slippage occurs in all financial markets and is most likely to affect Forex and Crypto trading due to their fast pace and frequent price movements.
With Crypto, it’s perhaps more likely as the market for digital currencies tends to be more volatile and, in certain cases, less liquid.
Forex slippage occurs when a market order is executed, or a stop loss closes the position at a different rate than set in the order. Many traders and investors use stop-loss orders to limit potential loss. An alternative approach is to use option contracts to limit your exposure to downside losses during fast-moving and consolidating markets.
Reputable forex dealers will execute the trade at the next best price.
Conclusion
Forex slippage occurs during high-volatility events in low-liquid assets. The best Forex brokers ensure zero to near-zero slippage and deploy cutting-edge price improvement technology that delivers positive slippage favourable to traders. We recommend avoiding Forex brokers acting as market maker.
