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Slippage
Slippage is the difference between the expected cost of a trade and the price at which it was actually done. It commonly occurs when executing a large order that exceeds the market’s available liquidity or placing a market order.
Slippage can affect a trader’s position in both good and bad ways. Positive slippage happens when the executed price is higher than the anticipated one, boosting profitability, a phenomenon often referred to as “price improvement”.
Negative slippage, on the other hand, occurs when the executed price is worse than expected, resulting in decreased profits or increased losses.
Traders can mitigate slippage by using limit orders instead of market orders.