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What Slippage Really Costs You (and How to Measure It)

Updated 14 July 2026 · 7 min read · PipTax education

Slippage is one of the least understood costs in trading, yet over hundreds of trades it can quietly outweigh the spread you were so careful to compare. This guide explains what slippage actually is, why it happens, and — more usefully — how to measure your own slippage so you know exactly what it's costing you.

What Slippage Actually Is

Slippage is the difference between the price you requested when placing an order and the price your broker actually filled it at. It can happen on entries, exits, stop losses, and take profits.

• Negative slippage: you get a worse price (buy filled higher, sell filled lower). This is a real cost.
• Positive slippage: you get a better price (buy filled lower, sell filled higher). This works in your favour.
• Zero slippage: rare in fast markets, more common in quiet ones.

Slippage exists because prices move between the moment you click "buy" or "sell" and the moment your order reaches the market and gets matched. In that window — often a fraction of a second, sometimes longer during volatility — the price can shift. Your broker's execution speed, the liquidity available, and the order type you use all affect how big that gap is.

It's important not to treat slippage as an occasional annoyance. Across a year of trading, small negative slippage on every entry and exit adds up in exactly the same way spread and commission do — it's just less visible because it doesn't appear as a clean line item on your statement.

Why Slippage Happens

Understanding the mechanics helps you manage it rather than just complain about it:

• Latency: the time between you sending an order and the broker's server processing it. Slower connections or distant servers mean more time for price to move.
• Liquidity gaps: if there aren't enough orders sitting at your requested price, your order fills at the next best available levels — this is common with larger sizes.
• Volatility spikes: news releases, central bank announcements, and market opens can move prices sharply in milliseconds, well beyond normal spread widening.
• Execution model: market execution fills at the best available price (with possible slippage); instant execution either fills at the quoted price or rejects/requotes.
• Weekend gaps: prices can jump between Friday's close and Sunday's open, causing significant slippage on any orders sitting near that boundary.

None of this means slippage is random noise you can't do anything about. It's largely predictable in pattern, even if not in exact size — which is exactly why measuring it matters.

How to Measure Your Own Slippage

You don't need special software to start measuring slippage — just a consistent log. For every trade, record:

1. Requested price — what you clicked or what your order was set to trigger at. 2. Executed price — the actual fill price from your trade confirmation. 3. Timestamp — to the second, if your platform allows it. 4. Order type — market, limit, stop, or pending. 5. Market condition — normal, near a news release, or during low-liquidity hours (e.g. late Friday, early Sunday).

Then calculate the difference in pips or points for each trade:

` Slippage (pips) = Executed price − Requested price (adjusted for direction) `

Average this across at least 50–100 trades, split by order type and time of day. Patterns usually emerge quickly — for example, you may find your slippage is negligible on limit orders during London hours but consistently negative on market orders around high-impact news.

This is the same kind of methodical approach PipTax uses when comparing broker execution — see the full breakdown on the [methodology page](/methodology.html) for how cost comparisons should be built from real, logged data rather than assumptions.

What Slippage Really Costs You Over Time

A small amount of slippage per trade doesn't sound like much, but frequency changes everything. Consider a trader placing 300 round-turn trades a year:

| Average slippage per trade | Trades per year | Rough annual cost impact | |---|---|---| | 0.1 pip | 300 | Small but non-zero | | 0.3 pip | 300 | Noticeable over a year | | 0.5+ pip | 300 | Can rival or exceed spread costs |

The exact pound or dollar cost depends on your position size, instrument, and account currency — which is why generic figures aren't useful. What matters is that you calculate your own numbers using your own trade log, then compare that to what you're paying in spread and commission. Use the [cost impact tool](/cost-impact.html) to see how execution costs stack up against your actual trading volume and style.

Reducing Slippage: Practical Steps

You can't eliminate slippage, but you can reduce its impact:

• Trade during higher-liquidity hours where possible — spreads are usually tighter and slippage smaller during major session overlaps.
• Avoid market orders right before/during high-impact news unless you're specifically trading the event and accept the risk.
• Use limit orders when the exact entry price matters more than getting filled — you trade fill certainty for price certainty.
• Check execution model on your account type — some accounts are built around fast market execution, others around fixed quotes.
• Test broker infrastructure — server location, execution speed, and order routing all vary. In Pepperstone's MetaTrader server list, for example, choosing a server geographically closer to you can reduce latency; IG's own platform versus MetaTrader can also behave differently under load. Check current details directly with each broker.

Comparing Slippage Across Brokers

Slippage isn't just about your own habits — the broker's execution infrastructure matters too. When comparing brokers:

• Ask directly about their execution model (market vs instant) and typical fill statistics.
• Look for any published execution quality reports or third-party audits.
• Cross-reference with your own logged data once live — demo accounts don't always replicate real slippage conditions accurately.
• Remember that spread, commission, and slippage together make up your total cost of trading — not spread alone.

The [brokers directory](/brokers/index.html) is a good starting point for comparing regulated options like Pepperstone and IG side by side, and the [audit tool](/audit.html) lets you plug in your own trade history to see where costs — including slippage — are really coming from.

The Bottom Line on Slippage

Slippage is a real, measurable cost that sits alongside spread and commission in your total cost of trading — ignoring it means you're only seeing part of the picture. The good news is that measuring it requires nothing more exotic than a disciplined trade log and some basic arithmetic. Start logging your requested versus executed prices today, look for patterns by order type and time of day, and use that data — together with PipTax's cost tools — to make an honest comparison of what your current setup is really costing you.

Keep going: Audit Cost Impact Index Methodology