Slippage refers to the difference between the expected price of a trade and the actual price at which the trade is executed.
Slippage can occur during high volatility or low liquidity conditions and is more likely to happen with larger orders. For example, if you place a market order to buy a stock at $10, but it gets filled at $10.05, that $0.05 difference is slippage.
Slippage can work both against you, resulting in higher costs, or in your favor, leading to better-than-expected prices. It’s a factor traders consider when evaluating the efficiency of a trading strategy or the quality of an execution platform.
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