Today I want to share with everyone a common issue in forex trading that I believe everyone has encountered – slippage. In fact, this is a quite normal phenomenon, but if not understood clearly and managed well, it can eat into a part of your profits.

What is slippage? Simply put, it is the difference between the price you expect when opening a position and the price you actually receive in the market. For example, you want to buy at 1.3650, but when the order is executed, the price has changed to 1.3660 – that is slippage. Sometimes it works in your favor (when the price is better than expected), but most of the time it reduces your profit.

Many new traders often think that slippage is caused by a bad broker with malicious intent, but actually, that’s not true. It occurs naturally, especially on ECN accounts connected to the interbank market. When the market is volatile, prices change very quickly, and your order cannot be executed exactly at the desired price.

So how to minimize slippage? First, choosing a reputable broker is a prerequisite. If you see slippage happening in more than 10% of your trades or the slippage level is higher than other brokers, that’s a sign to switch providers. Brokers regulated by ASIC, FCA, or FSC usually have better controls.

Second, pay attention to your internet connection. Wired connections are always more stable than Wi-Fi. When trading, close all other bandwidth-consuming applications like Skype or Messenger. This is especially important if you are scalping.

Third, you can set an acceptable maximum slippage level. If the price exceeds that level, the order will not be executed. This helps you better control your risk.

Another tip is to switch to higher timeframes. If you are trading on the 1-minute chart, the impact of slippage will be much greater than on the 4-hour or daily charts.

Regarding trading times, avoid periods right before major economic news releases. During the 30-40 minutes before news is announced, volatility increases, and slippage also rises. Waiting about 30 minutes after the news before trading is safer.

If you want to trade during hot market times, choose currency pairs with high liquidity like EUR/USD or USD/JPY. They tend to have less slippage compared to other pairs.

The final method is to use Limit orders instead of Market orders. Limit orders allow you to set a specific price and only execute when that level is reached. However, this type of order may not be filled if the price does not hit your target.

In summary, slippage is part of the trading game that we cannot completely avoid. But with the above methods, you can totally reduce its impact. The key is to choose a good broker, manage your network connection, understand the market well, and know how to place orders properly. Try applying these steps and see how the results turn out.