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What is slippage?
Highlighted from a real earnings story. Explained by Clicked.
Used in a sentence
The Daily Ledger · Markets
The backtest looked great until the guide warned that slippage would eat the strategy's edge in any fast-moving market.
The reader highlighted one word mid-article. Clicked made the trading term “slippage” easy to understand:
Explained in three depths
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Overview
Slippage is the gap between the price shown when you place a trade and the price it executes at. A quote is a snapshot, and the trade lands a moment later against whatever the market holds by then. Prices may have moved, or the quote covered less quantity than you ordered. The gap is usually small, grows in fast or thinly traded markets, and can fall either way, though it more often runs against you.
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Detail
Slippage measures how far an execution lands from the figure originally quoted. Two mechanical causes produce it. The first is delay. A quote is a snapshot of a moving market, and trading continues in the fraction of a second between clicking and executing. You get whatever the price has become. The second is depth. A quoted price is only good for a certain quantity, because that is all particular counterparties are offering there. A larger order consumes it and fills the rest at the next prices up, so the amount paid drifts from the quote even with no delay. Both causes swell in the same conditions: news releases, opening bells, panics, and obscure assets with few standing offers anywhere. Those are also the moments most people are trading at once, in both directions, with the least resting quantity to absorb them. The defence is a limit order, which fixes the worst price allowed and gives up guaranteed execution in exchange. Choosing which certainty matters more is the real decision under the term. Slippage also differs from the bid-ask spread: that spread is a visible standing gap, this is the unplanned part on top.
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Analogy
Slippage works like reserving hotel rooms for a group. You find a rate of ninety a night, then spend the evening waiting on replies about who is actually coming. Two things shift while you wait. The hotel adjusts its rate, as hotels do several times a day, and ninety becomes ninety-four. The ninety also covered only the three cheapest rooms, and your party needs eight, so five bill at a higher grade. Nobody misled you. Any rate you look up describes one instant and a limited supply, and your booking asked for more of both.
AI explanations may contain errors · Not professional advice
Same facts, different vibe — Slang mode 😎
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Overview
Slippage is the trading version of "may have changed since you looked". The number you clicked was true when the pixels drew it. Your order arrived a heartbeat behind and bought what was really on offer, not what was advertised an instant earlier. Nothing glitched and nobody robbed you. Seeing a quote and getting one are separate events. 😎
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Detail
Slippage is whatever happens after your click and before your fill, and it settles wherever things had drifted by then. Usually that stings a little. Occasionally it pays. Two things live in that gap. Motion is the obvious one. What you clicked had already aged by the time it arrived, costing a rounding error on a calm day and real money on a wild one. Size is the sneaky one. The tidy little number was only ever on offer for so many units. Order more and you sweep the shelf clean, then pay progressively worse for the rest. The fill comes back as an ugly blend you never saw quoted. Now the cruel part. Slippage stays tiny on sleepy days when nobody cares, then balloons during the exact chaos that made you reach for the button. The crash, the earnings surprise, the stock nobody traded until this morning. Urgency and cost arrive together, always. The escape hatch is boring but it works: a limit order, where you name a ceiling and refuse anything above it. Sometimes everything runs away and nothing executes. That is the tool doing its job. 😎
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Analogy
Slippage is booking flights for four people. The search showed three hundred, you went to check everyone's dates, and the same flight now says three hundred and forty. Worse, three hundred only ever covered one seat. Airlines sell in buckets, so seats two, three and four come out of dearer ones. The total lands nowhere near four times three hundred. Nobody moved the goalposts. That first figure meant one seat at one moment, and you came back wanting four at a later one. 😎
AI explanations may contain errors · Not professional advice
Formal definition — The same term, explained the usual way
Slippage is the difference between the expected execution price of an order, typically the quoted or last-observed price at submission, and the price actually realized. It arises from latency between order placement and execution during which the market moves, and from finite depth, whereby an order larger than the quantity available at the best quote executes across successively inferior price levels. Slippage increases with volatility, order size relative to displayed liquidity, and speed of market movement, and is a central component of transaction cost analysis. Market orders accept unbounded slippage in exchange for execution certainty; limit orders bound the price at the risk of non-execution.
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More from the gallery
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Every market has two prices, and the gap between them is what "trade right now" costs. The invisible fee nobody bills you for.
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What is a margin call?
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What is Implied Volatility?
The move the market expects, priced into options, and why IV crush burns earnings bets.
What is the MACD Indicator?
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