Slippage Prevention Guide: How to Avoid Slippage in Forex Trading (2026)

Introduction to Slippage

Slippage is the difference between the expected execution price and the actual execution price. It can work in your favor (positive slippage) or against you (negative slippage), but it's usually negative for traders.

Why Slippage Matters

• Trading Costs: Adds to your trading costs
• Profit Impact: Can reduce profits or increase losses
• Risk Management: Affects stop-loss and take-profit execution
• Strategy Performance: Can significantly impact scalping and short-term strategies
• Execution Quality: Indicator of broker execution quality

Understanding Slippage

What is Slippage?

Slippage happens when:

• Market moves between order placement and execution
• Liquidity is insufficient to fill at requested price
• Volatility causes rapid price changes
• Broker execution delay occurs

Types of Slippage

Positive Slippage:

• Order filled at better price than expected
• Example: Buy order at 1.1000, filled at 1.0998 (2 pips better)

Negative Slippage:

• Order filled at worse price than expected
• Example: Buy order at 1.1000, filled at 1.1003 (3 pips worse)

No Slippage:

• Order filled exactly at requested price
• Ideal scenario, especially for scalping

Causes of Slippage

1. Market Volatility

High volatility increases slippage risk. During volatile periods:

• Prices move rapidly
• Spreads widen
• Execution becomes more difficult

Learn about market volatility to understand when slippage risk is highest.

2. Low Liquidity

Low liquidity periods have:

• Wider spreads
• Fewer market participants
• Slower execution
• Higher slippage risk

Understanding liquidity in forex helps you avoid high-slippage periods.

3. News Events

Major news events cause:

• Sudden price movements
• Increased volatility
• Widening spreads
• Execution delays

Avoid trading during economic news releases to minimize slippage.

4. Order Size

Large orders can cause:

• Insufficient liquidity at requested price
• Price impact from your own order
• Partial fills
• Higher slippage

Use position sizing to manage order sizes appropriately.

5. Broker Execution

Broker execution quality affects slippage:

• ECN Brokers: Usually better execution
• Market Makers: May have more slippage
• Execution Speed: Faster execution = less slippage
• Liquidity Providers: Quality matters

When choosing a broker, consider execution quality.

6. Market Hours

Different trading sessions have different liquidity:

• London Session: High liquidity, low slippage
• New York Session: High liquidity, low slippage
• Asian Session: Lower liquidity, higher slippage (for some pairs)
• Overlaps: Best liquidity, lowest slippage

Understanding forex market hours helps you trade during high-liquidity periods.

How to Prevent Slippage

1. Trade During High Liquidity

Best Times:

• London session (08:00-16:00 GMT)
• New York session (13:00-21:00 GMT)
• London-New York overlap (13:00-16:00 GMT)

Avoid:

• Asian session (for EUR/USD, GBP/USD)
• Late Friday
• Holidays
• Pre-news periods

2. Use Limit Orders

Limit orders specify exact entry/exit prices:

• Buy Limit: Buy at or below specified price
• Sell Limit: Sell at or above specified price
• Guaranteed Price: No slippage (but may not fill)

Best For:

• Position trading
• Swing trading
• Non-urgent entries

3. Avoid News Events

Major news events cause high slippage:

• Central bank announcements
• Employment data
• GDP reports
• Interest rate decisions

Strategy:

• Close positions before news
• Wait 15-30 minutes after news
• Use news trading strategies if trading news

4. Choose Liquid Currency Pairs

High Liquidity Pairs (Low Slippage):

• EUR/USD
• GBP/USD
• USD/JPY
• USD/CHF
• AUD/USD
• USD/CAD

Low Liquidity Pairs (Higher Slippage):

• Exotic pairs (USD/TRY, EUR/TRY)
• Cross pairs during low-liquidity sessions

Learn about major currency pairs and exotic pairs.

5. Use Appropriate Order Types

Market Orders:

• Immediate execution
• May have slippage
• Best for urgent entries

Limit Orders:

• Guaranteed price
• No slippage
• May not fill

Stop Orders:

• Triggered at specified price
• May have slippage on trigger
• Use for stop-loss and take-profit

6. Choose a Quality Broker

Factors to Consider:

• Execution speed
• Liquidity providers
• ECN vs. Market Maker
• Slippage policies
• Regulatory oversight

Read our guide on choosing a forex broker for more details.

7. Monitor Spreads

Wide spreads indicate:

• Low liquidity
• High volatility
• Higher slippage risk

Monitor spreads as a liquidity indicator.

8. Reduce Position Sizes

Large positions can cause:

• Price impact
• Higher slippage
• Execution difficulties

Use position sizing to manage sizes appropriately.

9. Avoid Scalping During Low Liquidity

Scalping requires:

• Tight spreads
• Fast execution
• Minimal slippage

Avoid scalping during low-liquidity periods.

10. Use VPS for Faster Execution

Virtual Private Server (VPS):

• Reduces latency
• Faster execution
• Lower slippage risk
• Important for scalping and algorithmic trading

Slippage and Risk Management

Stop-Loss Slippage

Stop-loss orders may experience slippage:

• During Volatility: High slippage risk
• Gap Events: Significant slippage possible
• News Events: Very high slippage

Mitigation:

• Use guaranteed stop-loss (if available)
• Avoid trading before major news
• Monitor positions during high volatility

Learn about stop-loss strategies and risk management.

Take-Profit Slippage

Take-profit orders usually have less slippage:

• Positive slippage possible
• Less urgent execution
• Can use limit orders

Position Sizing

Factor slippage into position sizing:

• Account for potential slippage
• Adjust position sizes accordingly
• Include in risk calculations

Measuring Slippage

Calculating Slippage

Formula:

Slippage = Actual Execution Price - Expected Execution Price

Example:

• Expected: 1.1000
• Actual: 1.1003
• Slippage: +3 pips (negative slippage for buy order)

Tracking Slippage

Monitor:

• Average slippage per trade
• Slippage by currency pair
• Slippage by time of day
• Slippage by broker

Tools:

• Trading journal
• Broker reports
• MT4/MT5 trade history

Use trading journal software to track slippage.

Slippage by Trading Strategy

Scalping

Scalping is most affected by slippage:

• Tight Profit Margins: Small slippage can eliminate profits
• High Frequency: Many trades = cumulative slippage
• Requires: Fast execution, tight spreads, low slippage

Best Practices:

• Trade during high liquidity
• Use ECN brokers
• Monitor spreads closely
• Use VPS

Day Trading

Day trading is moderately affected:

• Multiple Trades: Cumulative slippage impact
• Intraday Focus: Less slippage than scalping
• Requires: Good execution, reasonable spreads

Swing Trading

Swing trading is less affected:

• Fewer Trades: Less cumulative slippage
• Larger Targets: Slippage is smaller percentage
• Can Use: Limit orders to avoid slippage

Position Trading

Position trading is least affected:

• Very Few Trades: Minimal cumulative slippage
• Large Targets: Slippage negligible
• Can Use: Limit orders exclusively

Common Mistakes

1. Trading During News Events

Trading during major news causes extreme slippage. Avoid it unless using news trading strategies.

2. Using Market Orders During Low Liquidity

Market orders during low liquidity guarantee slippage. Use limit orders instead.

3. Ignoring Spread Width

Wide spreads indicate high slippage risk. Monitor spreads before trading.

4. Not Factoring Slippage into Risk

Failing to account for slippage in risk calculations underestimates risk.

5. Choosing Wrong Broker

Brokers with poor execution cause more slippage. Research execution quality when choosing a broker.

6. Scalping During Low Liquidity

Scalping during low liquidity is unprofitable due to high slippage and wide spreads.

Best Practices

1. Trade During Peak Hours

Focus on London and New York sessions for best liquidity and lowest slippage.

2. Use Limit Orders When Possible

Limit orders eliminate slippage risk (but may not fill).

3. Monitor Spreads

Watch spread width as a slippage indicator.

4. Avoid News Events

Close positions before major news or wait after news releases.

5. Choose Quality Brokers

Select brokers with fast execution and good liquidity providers.

6. Factor Slippage into Calculations

Include slippage in risk-reward calculations and position sizing.

7. Track Your Slippage

Monitor slippage to identify patterns and improve execution.

Conclusion

Slippage is an unavoidable part of forex trading, but it can be minimized through proper strategies and broker selection. By trading during high liquidity, using appropriate order types, and choosing quality brokers, you can significantly reduce slippage and improve your trading results.

Key Takeaways

• Slippage is the difference between expected and actual execution price
• High volatility, low liquidity, and news events increase slippage
• Trade during high-liquidity periods to minimize slippage
• Use limit orders when possible to avoid slippage
• Choose quality brokers with fast execution
• Factor slippage into risk management calculations

Next Steps

• Learn about liquidity in forex to identify low-slippage periods
• Understand forex market hours for best execution times
• Read our spread guide to monitor liquidity
• Explore risk management to factor in all costs
• Check broker comparisons for execution quality