I just realized that the question about what slippage is has been asked a lot in the group, and in reality, it is at the core of the problem that confuses many traders and causes losses. So I want to share my understanding of this issue.

Simply put, slippage is the difference between the price we expect to enter or exit at and the actual price we get when executing the order. For example, you intend to buy at 1.3650, but when you place the order, the price has moved to 1.3660. That is negative slippage, which makes your entry more expensive. Sometimes, slippage can be beneficial, such as when the price moves down to 1.3640, and you get a better entry price. That is positive slippage.

The important thing to understand is that slippage occurs naturally in the market, especially during volatile periods. If you use an ECN account connected directly to an interbank bank, you cannot avoid it. But that doesn’t mean it’s a bad thing because if there were no slippage, it would mean no actual trading is happening.

The way to reduce slippage effectively, in my view, is first to choose a reliable broker. If slippage exceeds 10% of your total trades or is consistently higher than other brokers, consider switching. Second, ensure your internet connection is stable—use a wired connection instead of Wi-Fi, and close unnecessary programs during trading, especially if you are a scalper who needs speed.

Another good technique is to set a maximum slippage tolerance in your trading terminal. If the price exceeds your set limit, the order will not be executed. Additionally, try using limit orders instead of market orders in certain situations. Limit orders tend to get better prices, even if they don’t always fill.

I’ve noticed that slippage tends to decrease significantly when switching to higher timeframes. If you trade on a 1-minute chart, the risk of slippage is higher than when trading on a daily chart.

News events are a major factor. As soon as important news is released, the likelihood of slippage skyrockets. The advice is to avoid trading during the 30-40 minutes before the news and wait about half an hour after the news to let the market settle down.

Another tip is, if you need to trade during news, choose highly volatile news. For example, some news moves the price by 50 pips, while others only move 25 pips. If you enter a position when the news causes a large move, a slippage of 15 pips won’t impact your profit much. But if you enter during less volatile news, slippage can eat into your gains significantly.

Currency pairs like EUR/USD and USD/JPY have high liquidity, so slippage is generally lower than other pairs. However, during volatile market conditions, even high-liquidity pairs can experience slippage.

In summary, slippage is part of the trading game. We cannot avoid it entirely, but we can reduce it. Use the right techniques, choose a good broker, watch the news, and select the appropriate timeframe, and slippage will no longer be a major problem.