What Slippage Really Costs You (And How to Measure It)
Slippage cost is the quiet expense that never shows up on a broker's pricing page, yet it can chip away at your results just as much as the spread or commission you already watch closely. It's the gap between the price you clicked and the price you actually got — and most traders have no idea what it's really costing them because nobody ever taught them how to check.
What Slippage Actually Is
Slippage happens when the price moves between the moment you send an order and the moment it fills. It's not a broker "stealing pips" by default — it's a natural feature of live markets, especially during fast-moving conditions. There are two directions:
- Negative slippage — you buy higher or sell lower than requested. This costs you.
- Positive slippage — you buy lower or sell higher than requested. This benefits you.
Slippage most commonly shows up with market orders, since you're asking to be filled "now" at whatever price is available, rather than at a fixed level. Pending orders (limits) are generally more protected, though not immune during extreme gaps.
The key point: slippage is a real, measurable cost (or occasional benefit) that sits alongside spread and commission in your total cost of trading. If you're only tracking spread, you're seeing half the picture.
What Causes Slippage
Understanding the causes helps you predict when to expect it:
- News and data releases — NFP, central bank decisions, CPI prints. Liquidity thins out and prices can gap several pips in milliseconds.
- Low liquidity windows — the hour after the New York close, or thin holiday sessions, when fewer participants means wider, less stable pricing.
- Fast markets generally — sudden volatility spikes even without scheduled news, such as unexpected headlines.
- Order size — larger orders relative to available liquidity at the top of the book are more likely to "walk" through multiple price levels.
- Connection and execution speed — a slow platform, poor internet connection, or a broker server under heavy load during volatile periods can all add milliseconds that matter.
None of these causes are fixable by you alone, but knowing them tells you exactly when to be cautious — largely around scheduled news and illiquid hours.
How to Measure Your Own Slippage
This is the part most traders skip, and it takes less time than you'd think. You don't need special software — your own trade history is enough.
1. Export your trade history from your platform (MT4/MT5 or your broker's own platform export both work). 2. Record the requested price — most platforms log this alongside the fill price in the order comment or history detail. 3. Record the actual fill price for the same order. 4. Calculate the difference in pips, noting direction (negative or positive). 5. Repeat across at least 20-30 trades to get a meaningful average rather than one lucky or unlucky fill skewing the picture. 6. Separate news-time trades from normal-time trades — this shows you whether your slippage cost is concentrated around events you could simply avoid.
Keep a simple spreadsheet: date, instrument, order type, requested price, fill price, slippage in pips. Over a month this becomes a genuinely useful dataset about your own execution quality — far more relevant than any generic broker claim.
Turning Pips Into Pounds (or Dollars)
Once you have an average slippage figure in pips, convert it into money using your typical position size, the same way you'd calculate spread cost. A small average slippage per trade sounds trivial until you multiply it by trade frequency.
| Trades per month | Avg. negative slippage | Approx. monthly cost* | |---|---|---| | 20 | 0.3 pips | Modest but noticeable | | 100 | 0.3 pips | Meaningfully larger | | 100 | 0.8 pips (news-heavy) | Can rival your spread cost |
*Actual pound/dollar figures depend on your position size and instrument — use PipTax's [cost impact tool](/cost-impact.html) to convert your own pip figures into real currency terms based on your typical lot size.
The pattern holds regardless of exact numbers: frequency amplifies small inefficiencies. A scalper or high-frequency intraday trader should care about slippage cost far more than someone placing a handful of swing trades a month.
Slippage Cost vs Spread and Commission
It helps to think of your total execution cost as three layers stacking together:
- Spread — the quoted, upfront cost of entering a trade.
- Commission — a fixed or per-lot fee some account types charge.
- Slippage — the variable, sometimes hidden cost from execution timing.
A broker with a slightly wider spread but consistently tighter, more reliable execution might genuinely cost you less overall than one advertising the tightest spread on the market but with erratic fills during volatility. This is exactly why comparing brokers on spread alone is incomplete — you need to look at the full picture.
For a side-by-side breakdown of how these layers combine for your own trading style, run your numbers through PipTax's [cost audit tool](/audit.html), and see how methodology and assumptions are handled on the [methodology page](/methodology.html).
Reducing Slippage Cost in Practice
You can't eliminate slippage, but you can meaningfully reduce its impact:
- Avoid market orders in the minutes around high-impact news, or accept that slippage risk is elevated if you do trade the event deliberately.
- Use limit orders for entries where the strategy allows it, since they generally protect against negative slippage.
- Trade higher-liquidity hours for your pairs of choice — session overlaps tend to offer more stable pricing than thin, quiet periods.
- Check your broker's execution model — genuine market execution behaves differently to dealing-desk models, and it's worth understanding which you're using.
- Compare real execution data, not marketing copy — for example, when comparing Pepperstone's MetaTrader server options against IG's own platform, look at actual historical fill quality rather than assumed labels.
Browse current, comparable broker information on the [brokers page](/brokers/index.html) before deciding where slippage risk fits into your overall cost picture.
Conclusion: Make Slippage Cost Part of Your Routine
Slippage cost isn't something to fear, but it is something to measure — treat it as a standard part of your monthly trading review, alongside spread and commission. Pull your trade history, calculate your average slippage in pips, convert it to real money, and separate news-time trades from the rest. Once you know your own numbers, you can make informed decisions about order types, timing, and broker choice — rather than guessing. For a fuller breakdown of your total trading costs, start with PipTax's [cost audit tool](/audit.html) and the broader [trading school](/school/index.html) resources.
Key takeaways
- Slippage cost is the gap between the price you requested and the price you actually got — it can be negative (worse) or positive (better), and both matter for measuring execution quality.
- News releases, thin liquidity, and slow connections cause most slippage; market orders during high-impact events are the highest-risk moment.
- You can measure your own slippage for free using your broker's trade history — compare requested price to fill price on every order over 20-30 trades.
- A few tenths of a pip per trade in negative slippage compounds fast for frequent traders — it can rival or exceed the spread itself over a year.
- Execution quality varies by broker, account type and even server, so use PipTax's cost tool and broker pages to compare live conditions rather than relying on marketing claims.
- Limit orders, avoiding news windows, and choosing a broker with transparent execution stats are the three most practical ways to reduce slippage cost.
Frequently asked questions
- Is slippage the same as spread?
- No. The spread is the gap between the bid and ask price at any moment, and it's quoted upfront. Slippage is the difference between the price you requested when you clicked buy or sell and the price your order actually filled at. You can have a tight spread and still get bad slippage if the market moves before your order reaches the server.
- Can slippage ever work in my favour?
- Yes. Positive slippage happens when your order fills at a better price than requested, which is common with brokers running a genuine market-execution model. Good measurement tracks both positive and negative slippage so you see your net execution quality, not just the bad days.
- Does slippage happen with limit orders too?
- Rarely, and usually not against you. A limit order should only fill at your specified price or better, so negative slippage on limits is unusual outside extreme gaps or broker-specific rules. This is one reason limit orders are a common tool for reducing slippage cost on entries.
- How much slippage is normal?
- There's no single fixed number — it depends on the instrument, time of day, order size and broker. Fractions of a pip on major pairs in normal conditions is typical; several pips during news spikes on illiquid pairs is not unusual. The only way to know what's normal for you is to measure your own trade history.
- Do ECN or STP accounts have less slippage than standard accounts?
- Not automatically — account type affects how orders are routed, but slippage still depends on liquidity and market conditions at the moment of execution. Compare actual execution data via your broker's trade reports rather than assuming a label like 'ECN' guarantees better fills.