Slippage

Slippage occurs when trades are executed at prices different from expected, usually worse than intended. It's common during high volatility, low liquidity, or when using market orders for large positions. Positive slippage (better prices) can occur but is less common. Factors causing slippage include rapid price movements, wide bid-ask spreads, order size exceeding available liquidity, and delays in order transmission. Traders minimize slippage by using limit orders, trading liquid markets, avoiding news events, and breaking large orders into smaller pieces. Understanding and accounting for slippage is crucial for accurate backtesting and strategy development.