Slippage

Slippage refers to the situation where the price at which your order is executed does not match the price you initially requested. This happens when the market moves against your trade, and by the time your broker processes the order, the original price is no longer available.

Slippage can occur at any time, primarily due to two main reasons:

• High Market Volatility: If there is a sudden price movement beyond your stop order, the trade may not close in time, and the stop may not trigger at the level it was set.

• Market Gaps: This occurs when the market moves sharply up or down with little to no trading in between, leaving a gap in price levels.

Market Order: An order to buy or sell a security immediately at the best available current price, often prone to slippage during volatile markets.

Liquidity: The ease with which an asset can be bought or sold in the market without affecting its price, with lower liquidity increasing the risk of slippage.

Limit Order: An order to buy or sell at a specific price or better, designed to avoid slippage but with the risk of not being executed if the price is not met.