Slippage

Slippage arises because forex pricing is not static: the market is continuously moving, and there is an unavoidable gap between the moment a trader clicks 'buy' and the moment the broker's system processes the order against available liquidity. In a fast-moving market, the fill price may be several pips away from the intended price. Slippage can be positive (filled at a better price than requested) as well as negative, though on dealing-desk platforms traders often find positive slippage is withheld while negative slippage passes through.

Slippage is highest in three conditions: immediately before and after high-impact economic releases (NFP, CPI, central bank decisions), at session opens when liquidity is transitioning, and in pairs with naturally thin liquidity (exotics or some cross pairs). Market orders are most vulnerable; limit orders guarantee the requested price or better and therefore cannot receive negative slippage, though they carry the risk of non-execution if the market moves away.

ECN brokers with co-located servers near major matching engines (typically LD4 in London or NY4 in New York) and deep liquidity pools from multiple tier-1 banks minimise the window in which slippage occurs. Slower dealing-desk market makers are more prone to slippage because the order must pass through a manual or semi-manual dealing layer before being filled. Checking a broker's slippage statistics - some publish average positive and negative slippage by pair - is a meaningful signal of execution quality.