Definition
Slippage refers to the difference between the expected price of a trade and the actual price at which the trade is executed. It commonly occurs during periods of high volatility or low liquidity when prices move rapidly before an order is completed. Slippage can be positive or negative depending on whether the final execution price is better or worse than expected. While some slippage is normal, large amounts can significantly impact trading performance. Traders often use limit orders to reduce the risk of slippage.
Simple Explanation
Slippage happens when your trade executes at a different price than you expected.
Example
A trader places a market order to buy Bitcoin at ₹90,00,000, but due to rapid price movement, the order executes at ₹90,20,000.
Why It Matters
Understanding slippage helps traders manage risk and improve execution quality.