Slippage is the difference between your planned entry and actual entry. You want to buy at $100, but you get filled at $100.05 = 5 cents slippage. On 100 trades, 5 cents per trade = $5 total = 5–10% of small accounts' edge. Use limit orders, trade liquid markets, and avoid market orders to reduce slippage.
- Slippage is a hidden cost that kills small accounts
- Market orders are slippery; limit orders are tight
- Liquid stocks (SPY, AAPL, NVDA) have low slippage
- Illiquid stocks have high slippage; avoid them
Slippage is money left on the table every time you trade.
What is slippage?
You plan to buy 100 shares of SPY at $430.
Market order executed.
Actual fill: $430.05 (5 cents worse)
Slippage: 5 cents per share × 100 shares = $5 loss
Sources of slippage
Market order slippage
Market orders fill at the best available price (ask) at that moment.
By the time your order reaches the exchange, price might have moved.
Example:
- You see $430.00 on the screen
- You hit market order
- Market has already moved to $430.05
- You get filled at $430.05 (slippage)
Bid-ask spread
Every trade crosses the bid-ask spread.
If bid is $430.00 and ask is $430.01, you pay the spread (1 cent) every trade.
Tight spreads (SPY: 1 cent) = low slippage Wide spreads (illiquid stocks: 5–10 cents) = high slippage
Volatility slippage
In fast markets, prices move between order entry and fill.
During earnings or economic data, slippage can be 10–50 cents on a normal stock.
Market impact (size)
If you buy 10K shares, your order might move the price.
Buying 100 shares: No market impact. Buying 10K shares: You push the price up slightly (paying 1–5 cents more).
Score the Setup Before You Take It
TRADZY's Void Engine rates any setup 0–100 across 12+ variables: structure, trend alignment, volume, momentum and key levels.
Score a Setup Free →Reducing slippage
Use limit orders
Limit order: "Buy 100 shares at $430.00, not more"
If price is $430.05, your order won't fill. But if it drops to $430.00, you get filled.
Pros: Guaranteed price, no slippage Cons: Order might not fill if price doesn't touch your limit
Trade liquid instruments
Slippage on SPY: 1–2 cents Slippage on low-volume stock: 5–10 cents Slippage on illiquid options: 20–50 cents
Rule: Trade only liquid instruments. SPY, QQQ, major stocks, major forex pairs.
Avoid market orders
Market orders = guaranteed fill, worst price Limit orders = best price, might not fill
Better: Use limit orders. If they don't fill, it wasn't meant to be.
Avoid trading around data
Before earnings or economic data, bid-ask spreads widen. Slippage increases 5–10x.
Trade 2 hours after, when volatility settles.
Use a quality broker
Some brokers fill at better prices than others.
Interactive Brokers often has tighter fills than Robinhood (for active traders).
Forex: ECN brokers have tighter fills than market makers.
Slippage math
Slippage compounds.
Example: 100 trades at 1% risk ($100)
Average slippage: 5 cents per share × average position = $2 per trade
Cost: 100 trades × $2 = $200 total slippage
If your edge is +0.2R per trade = +$20 per trade × 100 = +$2,000 profit
Slippage: −$200 (10% of profit)
Net: +$1,800 profit (still good, but slippage hurt)
On a $5K account (1% risk = $50 per trade):
Slippage might be $1 per trade × 100 = $100 total
If your edge is $10 per trade, slippage is 10% of profit again.
On small accounts, slippage kills.
Slippage by instrument
| Instrument | Typical slippage | Why |
|---|---|---|
| SPY, QQQ | 1–3 cents | Very liquid |
| Major stocks (AAPL, MSFT) | 2–5 cents | Liquid |
| Small-cap stocks | 5–20 cents | Illiquid |
| Forex (EUR/USD) | 1–3 pips | Liquid |
| Options | 5–20 cents | Illiquid |
| Crypto | 0.1–1% | Depends on exchange |
FAQ
How do I know how much slippage I had?
Check your trade log: intended entry vs actual entry. Over 100 trades, average the difference.
Can I avoid slippage?
Not entirely, but you can minimize it: - Use limit orders - Trade liquid instruments - Avoid volatile periods - Size small (less market impact)
Does slippage matter on bigger accounts?
Less proportionally. On a $100K account, $2 slippage is 0.002% of capital. On a $5K account, $2 slippage is 0.04% of capital.
Should I increase my position size to make up for slippage?
No. That increases risk. Instead, reduce slippage by trading liquid instruments.
Does leverage increase slippage?
Indirectly. Leveraged accounts use margin, which can have wider spreads. Stick to low leverage or no leverage to keep slippage tight.
Put This Into Practice
- Score your next setup 0–100 with the Void Engine before entering
- Log the trade and tag the setup in the TradLog
- Review weekly: keep what pays, cut what doesn't
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Educational content, not financial advice. Trading involves substantial risk of loss.