Why has my position/order been triggered at a price different than the price I have requested? Slippage explained
Slippage is where the market price jumps from one value to another further away, skipping prices in between – this happens because the market doesn’t always move a point at a time.
For example, if the market is at 100 and you have your Stop Loss at 95, if the market drops from 100 down to 90 and skips out your Stop Loss it's because the market has not officially traded at 95, therefore, you are filled at the next best price which is 90.
Slippage can occur at any time. However, it's most prevalent during periods of higher volatility i.e. over macroeconomic data releases. Slippage can occur when a trade is opened or closed, as well as when an order is triggered such as a Stop Loss or Take Profit. It is important to note that there is never a minimum or maximum slippage amount.
When slippage happens over an order such as a Stop Loss and/or Take Profit, it is not an error of the platform but rather a movement in the market. When that happens and the market passes through your Stop Loss price, the Stop Loss will be triggered and then filled at the first available price.
This can result in your Stop Loss being filled at a price far away from what you had requested - when you place a Stop Loss on a trade, this is the price that you wish your stop to trigger at. Sometimes the market passes through your Stop Loss price, and then the Stop Loss will be triggered and then filled at the first available price.
So, let's look at an example of slippage. Let's say:
- The current price of the Wall Street 30 is 35295
- You set a pending BUY order to open on the Wall Street 30, at a price of 35300
- The price shoots up quickly from a price of 35295 to a price of 35305
- Your pending BUY order will be triggered and filled but at a new price of 35305
In this example, you would have been slipped by 5 points.
Keep in mind, that Stop Loss and Take Profit orders are contingent and are attached to an open order. This means they do not exist until an open order has been created and are aligned to an open order.
