You see a price on the screen, click buy, and the order fills a little higher than you expected. Or your stop-loss is triggered and closes your trade well beyond the level you set. These experiences frustrate almost every trader at some point, and they are often blamed on the platform. Usually the explanation lies in two related concepts: latency and slippage.
This guide explains what each one is, where they come from, how different order types behave, the market conditions that make slippage worse, and practical steps to reduce its impact. It also explains how to build realistic slippage into your risk planning, so that it never turns a manageable loss into a damaging one.
Two related but different ideas
- Latency is delay: the time between an event and its effect. Price latency is the delay between a price changing and you seeing it. Order latency is the delay between you clicking and your order being processed.
- Slippage is a price difference: the gap between the price you expected and the price you actually received.
Latency is one cause of slippage, but not the main one. Most slippage comes from how fast the market is moving and how much liquidity is available at the moment your order executes.
Where latency comes from
Every step between the market and you takes time:
- Price generation. A new trade or quote has to be produced and processed.
- Transmission to you. The update travels across networks to your device. In optical fibre, signals travel at roughly 200,000 km per second, so physical distance alone puts a floor under delay — a few milliseconds per thousand kilometres, before routing and congestion.
- Rendering. Your device decodes the update and redraws the chart.
- Your reaction. Human reaction time is typically measured in hundreds of milliseconds — far longer than most network delays.
- Order transmission and processing. Your order travels back and is checked and executed.
For a trader on 1-hour or 4-hour charts, a few hundred milliseconds of total latency is irrelevant. For someone trying to trade the first second after a major announcement, it can matter a great deal. Our guide on how real-time market data works goes into the delivery chain in detail.
Where slippage comes from
Fast-moving prices
If price is moving rapidly, it may change between the moment you see it and the moment your order executes. The faster the move, the larger the potential gap.
Liquidity
Liquidity is how much can be traded near the current price. In a deep market, a normal-sized order fills close to the quoted price. In a thin market, there may be little available at the best price, so an order is filled partly at the next, worse prices. Liquidity is typically lower outside main trading hours, during holidays and in less-traded instruments.
Order size
A large order relative to available liquidity will "walk the book", filling at progressively worse prices. This matters most for large orders in thin markets.
News and events
Around major scheduled announcements — interest-rate decisions, employment and inflation data — liquidity often thins out just before the release and price can jump in the moment after it. Spreads widen and fills can be far from the last quoted price.
Gaps
A gap is when price moves from one level to another with no trading in between — for example, between the close of one session and the open of the next. A stop-loss inside a gap cannot be filled at its level, because no trade occurred there; it fills at the first available price after the gap.
How order types affect slippage
Your choice of order type determines whether you control the price or the certainty of execution — you cannot fully control both.
Market orders
A market order, in the SEC's Investor.gov definition, is an order to buy or sell immediately at the best available current price. It prioritises execution certainty over price. In calm, liquid conditions the fill is usually very close to the quote; in fast or thin conditions it can be noticeably different.
Limit orders
A limit order is an order to buy or sell at a specific price or better. A buy limit will never fill above its price, and a sell limit never below. That removes negative slippage — but the order may not fill at all if the market never reaches your price, or may fill only partly.
Stop orders
A stop order, as the SEC explains, becomes a market order once the stop price is reached. It guarantees that action is taken, not the price. This is why a stop-loss can fill beyond its level in a fast market or a gap. Stop orders are essential for risk control, but they are not a guaranteed exit price.
| Order type | Controls | Risk |
|---|---|---|
| Market | Execution (fills now) | Price may differ from the quote |
| Limit | Price (or better) | May not fill, or fill partly |
| Stop | Triggers an exit at a level | Fills at the next available price, which may be worse |
Our guide to order types on RumiEX explains how each one is placed on the platform.
Positive slippage
Slippage is not always bad. If the market moves in your favour between placing and filling an order, you can receive a better price than expected. Whether this happens depends on how the venue executes orders and on the order type. It is a reminder that slippage is about the market moving, not about anyone taking advantage.
A worked example
A trader's account is $5,000 and they risk 1% ($50) per trade. They buy a currency pair with a stop-loss 25 pips away, sizing the position at $2 per pip.
- Normal conditions: the stop is hit and fills exactly at its level. Loss: 25 pips × $2 = $50.
- During a news release: price jumps through the stop and the order fills 8 pips beyond it. Loss: 33 pips × $2 = $66 — 1.32% of the account instead of 1%.
- Over a weekend-style gap: price opens 40 pips beyond the stop. Loss: 65 pips × $2 = $130 — 2.6% of the account.
None of these outcomes is a malfunction; each is how stop orders behave. The lesson is that planned risk and actual risk can differ, and the difference is largest exactly when markets are most turbulent.
How to reduce the impact of slippage
Use limit orders for entries where you can
If getting a specific price matters more than certainty of entry, use a limit order. You will miss some trades, but you will not overpay.
Avoid trading into major scheduled releases
Check the economic calendar. Many traders avoid opening positions in the minutes around major announcements, or reduce position size if they do. Put this into your trading plan.
Trade liquid markets and active hours
Major currency pairs during overlapping European and US hours, and the largest cryptocurrencies, usually have deeper liquidity than minor markets in quiet hours.
Keep position size appropriate to liquidity
Large orders in thin markets slip more. If an instrument is thinly traded, trade smaller.
Build a slippage allowance into risk
When calculating position size, assume your stop may fill somewhat beyond its level. Some traders reduce risk per trade slightly to leave room for this; others add a small allowance to the stop distance in the position-size calculation. Our risk management guide shows the base calculation.
Use higher timeframes
On higher timeframes, stops are wider and a few pips of slippage is a much smaller share of the planned risk than it is on a 1-minute chart.
Keep your connection stable
You cannot change the distance to a server, but a stable connection avoids the worst delays — dropped connections, reconnections and stale prices. Wired or strong Wi-Fi connections are generally more stable than weak mobile signals.
Check that your prices are fresh
Never trade on a price you are not sure is current. A platform that shows when its feed has stopped updating protects you from the most extreme form of latency: acting on a price that no longer exists. RumiEX displays a warning on the chart if prices haven't updated recently.
Measure your own slippage
General advice only goes so far; your own numbers tell you how much slippage actually affects your trading. For a few weeks, record for every order:
- The price you intended (the quote when you clicked, or your stop level).
- The price you actually received.
- The difference, in points and as a share of your planned risk.
- The order type, the instrument and the time of day.
- Whether any news was released around that time.
Patterns appear quickly. You may find that slippage is negligible on limit entries, small on stops in normal hours, and large on stops triggered around a particular release. That tells you exactly where to change your process — for example, avoiding a specific announcement, or switching entries from market to limit orders. A trading journal is the natural place to keep these records.
Slippage in backtests
Backtests usually assume that every order fills exactly at the intended price. Real trading never does. When testing a strategy, include an allowance for spread and slippage on every trade — especially for strategies that trade frequently, use stop entries, or trade around news. A strategy that is only marginally profitable before these costs is often unprofitable after them. See how to test a trading strategy.
Fixed-price products
Some products, such as fixed-time Up/Down trades, record an entry price at the moment the trade is opened and settle against the price at a set expiry time. They have no stop-loss to slip, but timing still matters: the entry price is the price at the moment of execution, and the outcome depends on the price at the exact expiry moment. Our article on Up/Down fixed-time trades explains how these are priced and settled.
Key takeaways
- Latency is delay; slippage is the difference between expected and actual fill price.
- Most slippage comes from fast markets, thin liquidity, large orders, news and gaps — not from your connection.
- Market orders favour certainty of execution; limit orders favour price; stop orders trigger at a level but fill at the next available price.
- Planned risk and actual risk can differ, most of all in turbulent conditions.
- Reduce slippage with limit orders, liquid markets, avoiding major releases, appropriate size and a risk allowance.
Next: securing your trading account with two-factor authentication, or practise order types on a free demo account.
Frequently asked questions
What is slippage in trading?
Slippage is the difference between the price you expected when you placed an order and the price at which it actually filled. It can be negative (a worse price) or positive (a better price), and it is most common in fast-moving or thinly traded markets.
Can slippage be positive?
Yes. If the market moves in your favour between placing and filling an order, you may receive a better price than you expected. Whether positive slippage is passed on depends on the venue and order type.
Do limit orders have slippage?
A limit order will only fill at your limit price or better, so it cannot fill at a worse price. The trade-off is that it may fill only partly, or not at all, if the market never reaches your price.
Why did my stop-loss fill below my stop price?
A stop order becomes a market order once the stop price is reached, and then fills at the best available price. In a fast move or a price gap, the next available price can be some distance beyond your stop level.
Does a faster internet connection prevent slippage?
A stable, low-latency connection reduces one source of delay, but most slippage comes from market conditions — speed of the move, liquidity and order size — rather than from your connection. Order type and timing usually matter more.
Sources and further reading
Written and reviewed by the RumiEX Editorial Team. This article is for education only and is not financial, investment or tax advice. Read our editorial standards.