Investing term
What is Slippage?
When your order fills at a worse price than you expected because the order was big enough to eat through the best levels.
Slippage is the difference between the price you expected and the worse price you actually got, usually because your order was large enough to eat through the best-priced shares and dip into worse ones. It's most severe in thinly traded securities and fast-moving markets. Using limit orders instead of market orders is the main way to cap slippage.
For example
You try to buy a large block of a small stock; your order exhausts the cheap shares and fills at progressively higher prices — that gap is slippage.
Slippage is taught hands-on in Stage 5 — How Markets Work Globally.
See the lesson →