Slippage refers to the difference between the expected price of a trade and the actual price at which the trade is executed. It is a common occurrence in the financial markets and can happen during periods of high volatility, when market orders are placed, or when there is low liquidity.
Key points about slippage include:
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Positive Slippage: This occurs when a trade is executed at a better price than expected, resulting in a more favorable outcome for the trader.
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Negative Slippage: This happens when a trade is executed at a worse price than expected, which can lead to increased losses or reduced profits.
Slippage is an inherent part of trading in financial markets and is particularly common in fast-moving conditions, such as during major economic news releases or significant market events. Understanding slippage and its potential impact on your trading is crucial for effective risk management.
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