Slippage (2)

This is a situation where a deferred, pending order (see) is executed by the broker at a rate worse than stated by the trader, or else when it is not executed at the demand price (Bid - see), but by the market price (see). For example, if you put up a pending purchase order and nobody on the marker wants to sell for the price you stated. Likewise, there is a reverse situation: if your order is put up for sale, it may happen that there is noone who would like to buy it at this moment. Then the broker makes your deal at the current market price. The difference in your expected price and the real price for which the order sells is called slippage. It is important to know that the size of the slippage may be a couple of points, or as many as several dozen. However, in a dynamic, liquidity (see) market, slippage is usually almost negligible.

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