Risk Management
Slippage — Definition & Example
The difference between the expected execution price and the actual fill price — a hidden trading cost.
Slippage occurs when the market moves between order submission and execution, when liquidity is thin, or when an order is too large for the visible book. Market orders are most exposed; limit orders eliminate price slippage but trade off against execution risk. Slippage is highest in fast-moving instruments, low-liquidity hours, and around news events. Over many trades it compounds materially.
Example
You place a market buy order when the ask is ₹500.50. By the time the order reaches the exchange, market orders ahead of you have lifted the ask to ₹500.80. Your fill is ₹500.80 — ₹0.30 of slippage per share.
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