Slippage in Forex Trading: What It Is, Why It Happens, and How to Reduce It

16 February 2026

To avoid slippage in Forex, it is essential to understand what it is and why it matters significantly in Forex trading. Slippage is one of those Forex concepts that almost every trader experiences and hears about its existence, but very few fully understand. You place a trade on your platform expecting one price, and the order gets filled at a slightly higher or lower price. At first, it might feel just frustrating, especially when you are using scalping strategies, and many traders often assume it is the broker’s fault. However, the reality is different. Slippage in Forex is a normal part of how live markets work. Slippages occur because Forex prices constantly move and change. When markets become fast, liquid, and react to news, prices can change in milliseconds. This can trigger slippage. Below is the Forex slippage explained in simple terms to help forex traders manage their trades, reduce risks, and design strategies that survive real market conditions, but just backtest.

What is slippage in Forex?

Slippage in foreign exchange markets occurs when your trade is executed at a different price than the one you requested. Certain market conditions trigger slippages:

The market moves before your order is filled
There is not enough liquidity at your chosen price
Prices jump quickly due to volatility

Since the forex market is a very liquid market, the most common cause of slippages is highly volatile sessions, when major macroeconomic news is released. On rare occasions, your order might experience slippage because the liquidity is very thin and there are no buyers or sellers at your price. This can only occur on Friday evenings and during calm sessions. Holidays can also play a role when everybody is busy doing something other than forex trading. No matter what causes slippage in forex, it might seriously affect your trading performance.

Slippage types

There are two types of slippage in financial trading: negative and positive. The negative slippage is when you get a worse price than expected, and the positive slippage occurs when you get a better price than expected.

In the end, the main idea is that both outcomes are normal in real forex trading and slippage is not a mistake or broker’s fault; it is simply the result of live price fluctuations.

Forex slippage explained in practice

Slippage is not theoretical; it is a very practical phenomenon. When you click buy or sell, you are not locking in a fixed price. You are just asking the market to execute your trade at the best available price at that very moment.

If the price changes even slightly before the order reaches liquidity providers, your final execution price changes too. This small lag is often milliseconds, but is still enough for a slippage to occur. So, slippage is simply the difference between the price you expected and the price you actually received.

What Causes Slippage in Forex?

To manage slippages in trading properly, traders must understand the main causes of the slippage phenomenon. The main reasons are market speed, liquidity, and execution conditions, and the trading platform and internet on very rare occasions.

Market volatility

High volatility means prices move very fast. This can occur during events like economic data releases, central bank announcements, and unexpected geopolitical news events. This is why traders watch economic calendars very closely and monitor every highly impactful news to ensure they can avoid slippage in forex trading and reduce losses. Economic data releases include interest rates, inflation, GDP, and many similar ones. Central bank announcements and symposiums often also impact forex markets and cause forex pairs to become highly volatile. This is the exact time when slippages occur, and traders should be careful to avoid filling at worse prices. Unexpected geopolitical events such as armed conflicts and political changes can also throw markets into turmoil.

Prices can jump several pips instantly. When this happens, there may be no available orders at your requested price, so your trade fills at the next best level, which means you might get filled several pips away from your preferred price.

Overall, market volatility is the most common cause of large slippage.

Low liquidity

Liquidity refers to how many buyers and sellers are active at each price level. In other words, it means how quickly you can buy or sell the asset. Liquidity is key in forex trading because low liquidity causes large spreads and price gaps. To avoid slippage in trading, you must know when liquidity is thin as well. Slippages usually increase when you trade late at night or early in the morning. It is also common when you trade exotic or less popular currency pairs, which have thin liquidity, and prices often jump around at the next best available level. Major pairs can also become much less liquid when market participation is low. The bottom line: if there is no liquidity at your chosen price, the order slips to the next available price.

Order types

Different order types experience slippages differently. There are three main types of orders, including market orders, stop orders, and limit orders. Many other forms are combinations of these orders, but we will consider these three as they are the most popular and available.

Market orders - Most exposed to slips
Stop orders - Often slip during breakouts
Limit orders - Controls price but might not fill

Stop-loss orders are especially vulnerable because they turn into market orders once triggered. Stop-loss orders are stop order types.

Broker execution models

To avoid slippage in trading, you should also understand the trade execution model offered by your forex broker. Market makers may offer fixed pricing, but use requotes. Market makers are risky brokers and traders should avoid them. ECN and STP brokers send orders directly to the market. They route their orders to liquidity providers, meaning they do not interfere or requote anything, which is important. In true ECN environments, slippages reflect real supply and demand dynamics, not broker intervention.

News and data releases

High-impact news which were mentioned above also causes slippages. Among those, the most impactful one is the NFP or Non-farm payrolls from the United States, which constantly shakes EUR/USD and other major currencies. When this news is released, slippages are a common occurrence. If you are a beginner who wants to avoid slippage in forex, you might avoid trading during these news releases. Major macroeconomic news can create price gaps and sudden liquidity shortages, and slippage during these moments can be extreme and unavoidable.

Forex slippage example

A simple forex slippage example could unfold like this:

EUR/USD is trading at 1.1000
You place a market buy order
The price jumps to 1.1003 instantly
Your order fills at 1.1003

This 3-pip difference is your slippage in this theoretical scenario. During major news, slippage can even reach 10-15 pips or even more, even on major pairs, which makes it extremely risky to trade during these releases unless you have a very well-tested strategy. The above is just a Forex slippage example of a theoretical scenario that might not sound real, but similar scenarios are plenty when trading volatile markets, making it critical that you have a very strict risk management system in place.

Slippage vs spread: key differences

Many beginner traders often confuse slippage with spreads, but these two are completely different costs associated with forex trading. These are common phenomena across all financial markets, and every beginner, no matter the market they want to trade, must learn about these basic but crucial concepts before committing real capital.

Spread is the gap between bid and ask prices. In simple terms, when you want to trade an instrument, there are two prices, for buying and for selling. These prices often differ slightly, and the difference is called the spread, which you pay immediately when opening a trading position.

Slippage, on the other hand, is a price change during execution, when the opening price (no matter buy or sell order) is different from the price you wanted. Slippage can occur with both buy and sell trades.

Overall, spreads are visible before entry, and slippage depends on market conditions and cannot be predicted with certainty. You must know the difference between slippage vs spread to make correct trading decisions and control risks.

How slippage affects your forex trading performance

There are several reasons why you should avoid slippage in trading. Knowing how it can impact your trading performance is key. Slippage occurs when trades are filled at worse prices than expected, frequently during volatility and or low liquidity. It can damage your performance in several ways, including reducing your risk-reward ratio, making backtest results unrealistic, turning small wins into losses, and weakening overall stop-loss protection. Worse entries and exits can seriously lower your profits while losses stay the same, reducing your real risk-to-reward ratio and seriously gaming the performance of your trading system.

Backtests can show very good performance and profits, but in real markets, slippage can worsen your overall profits. Scalping gains can also disappear instantly with enough slippage, and since you target several pips in most scalping systems, this can not only evaporate all profits but turn profitable strategies into losing ones. Slippages can also harm stop-loss orders as stop-losses might fill beyond intended levels, increasing losses.

The most vulnerable strategies are the ones with tight stops and small targets, which are often scalping systems.

How to avoid slippage in Forex realistically

Since it is advised to avoid slippage in trading, below are several pro tips to ensure you avoid it most of the time.

Trade high-liquidity sessions

The best liquidity is during the London trading session, the New York session, and the London-New York session overlap. Avoid very late or very early trading hours when possible because the liquidity tends to dry up during these hours, and slippages and gaps are common occurrences.

Avoid trading major news

If your strategy is not designed for news trading, you must stay out during high-impact news releases. The best approach is to wait until initial volatility and spreads normalize. This is one of the simplest methods to avoid slippage in trading and reduce the chances of unnecessary losses.

Use limit orders when possible

Limit orders are great to avoid slippage in Forex trading because it locks in a price, meaning they only trigger orders when the price hits your predetermined levels. It prevents negative slippage. However, you can miss trades due to gaps and slippages. They are ideal for swing and position traders because these strategies value price control.

Trade liquid currency pairs

Major currency pairs like EUR/USD, USD/JPY, and GBP/USD are also the most liquid pairs out there, meaning they have a very small chance of slippages and gaps during normal trading hours. By having deeper liquidity, the chances of slippages are very low. This is in contrast to exotic currency pairs, which have frequent slippage and gaps, making trading more costly.

Adjust stop loss placement

To avoid slippage in forex trading, you should try to avoid stops that are too close to the market price, to leave some room for the price to move, and to prevent slippage not to trigger your stops prematurely. More logical stop loss placement reduces forced exits during volatile times and ensures you do not worsen your risk-reward ratio and ultimately trading performance.

When triggered, stop-loss orders become market orders. In a fast-moving environment, stops may fill far from intended levels, and price gaps can easily skip stop loss prices entirely. This is normal market behavior and not manipulation.

Slippage and scalping strategies

Now, when we know what causes slippage in forex, it is also crucial to discuss strategies that are most vulnerable to slippage and price gaps. Scalping is extremely sensitive to slippage and gaps because it heavily relies on small profit targets, stop-losses are usually tight, and trading frequency is high. Scalping systems usually hold open trades from seconds to several minutes. On very rare occasions, they might hold it for an hour or two, but it is not recommended. Even 1-2 pips of slippage can destroy most scalping systems. Execution quality is critical, and slippages are deadly.

Backtests vs live trading slippage

Slippage in forex is also dangerous because it is invisible during backtests. Many backtests often ignore slippage entirely, assume perfect fills, and as a result overestimate real profits. This is very dangerous, especially if you switch from backtesting to real money trading. It is always essential to test your strategies that behaved well on backtests in a demo account. If the strategy also shows promise in demo trading, only then can it be tested in live market scenarios with small capital. You must always factor realistic slippage into live trading expectations, especially in scalping systems.

Psychological impact of slippage

Slippage can also cause psychological effects. It can trigger frustration, overtrading, revenge trading, and loss of confidence. These traits are very harmful, especially for beginner forex traders, and add to the list of reasons why traders should avoid Slippage in forex.