Slippage in Trading

Small losses from executing trades at prices worse than the mid price (buying at ask, selling at bid).

Besides broker commissions, slippage is another main component of transaction costs.

The size of bid-ask spread and thereby slippage is inversely related to liquidity. Less liquid instruments have wider bid-ask spreads and are therefore more expensive to trade.

Have a question or feedback? Send me a message. It takes less than a minute.