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As a trader, you must be familiar with the term slippage and how much of a difference it can make. High slippage is every trader’s worst nightmare. However, if you are a new trader or unfamiliar with the term, let us clarify things for you.
What is slippage?
As we know, slippage represents the difference between the expected price of a trade and the price at which the trade is executed. It happens when a trader places an order but performs it at a different price.
In forex and other securities, the computer gives signals for the entry and exit of a trade. Unfortunately, these often differ from the actual entries and exits traders make using real money. The difference between the computer’s signals and the actual trade executed by the trader is called slippage.
Slippage can be a very tricky concept to comprehend. These slippages are either positive or negative point values. These can be high or low. These can be profitable or make you lose a considerable amount. In some instances, you can even end up with a partial loss.
So, how will you deal with slippages?
For some veteran traders, understanding slippage is not a mammoth task. They know how to tackle them, but such is not the case with everyone. So, if you think you suffer losses from slippage, it is time to look for a low-slippage forex broker.
What is a Low slippage forex broker?
A low-slippage forex broker such as HFM Markets or Avatrade can offer you the expected execution price value. This will help you minimize your losses. For example, if you buy ERUUSD at 1.11, a high-slippage forex broker can execute and make a trade at 1.1102 instead of the expected price of 1.1100.
Visit low-slippage forex broker:
A low-slippage Forex broker is a brokerage that offers trading services in the foreign exchange (Forex) market with a low rate of slippage.
Slippage is a term used in trading to denote a situation where a trader gets a different trade execution price than expected—for example, ind. In the Forex market, slippage occurs when an order is filled at a rate different from the requested one. This usually happens during periods of high volatility or low liquidity in the market and can often occur during significant news events or the opening of a new market session.
A low slippage broker, therefore, means that the broker has mechanisms or technologies to reduce the slippage rate. These could include having a solid liquidity pool, using advanced order routing and execution technologies, and maintaining good relationships with their liquidity providers.
It’s important to note that while low slippage is generally a positive attribute for a Forex broker, it’s not the only thing traders should consider when choosing a broker. Essential factors include regulation and licensing, commission and fee structures, customer service, platform usability, and overall reputation in the industry.
There are two ways to minimize your losses due to slippage – have an advanced system that stays updated 24/7 and opt for a no-dealing desk brokerage. The best way to deal with slippage is to be vigilant and act. Of course, this is easier said than done, but professional slippage brokers adhere to all these points.
Your aim should be to seek low-slippage brokers who offer price improvements. Price improvement can be a significant game-changer; you can pre-set the limit and get positive slippage even if the prices hike.
Always hire a broker who is regulated by a local or international jurisdiction. This is a must if you want to keep your funds safe.
To make things easier for you, we have prepared a checklist for finding the right slippage broker. It is at the end of the article.
Can we find a no-slippage forex broker?
The forex slippage comparison Table
| Broker | Median Slip. | Avg. Slip. | Min. Slip. | Max. Slip. |
|---|---|---|---|---|
| ACTIVTRADES slippage | 74,00 | 139,00 | 7,00 | 1.902,00 |
| ADS SECURITIES slippage | 125,00 | 191,00 | 2,00 | 2.027,00 |
| AVATRADE EU slippage | 127,00 | 188,00 | 0,00 | 1.494,00 |
| AVATRADE slippage | 196,00 | 254,00 | 12,00 | 1.320,00 |
| AXITRADER slippage | 77,00 | 178,00 | 4,00 | 3.010,00 |
| DUKASCOPY slippage | 93.000 | 94.000 | 0.930 | 1.900 |
| FXCM MARKETS slippage | 111,00 | 163,00 | 2,00 | 2.030,00 |
| FXCM UK slippage | 111,00 | 149,00 | 1,00 | 2.337,00 |
| FXDD MT slippage | 56,00 | 109,00 | 2,00 | 1.389,00 |
| FXOPEN ECN slippage | 91,00 | 132,00 | 7,00 | 1.518,00 |
| FXOPEN slippage | 145,00 | 204,00 | 4,00 | 2.009,00 |
| HOTFOREX slippage | 95.000 | 98.000 | 0.000 | 2.100 |
| IC MARKETS EU slippage | 48,00 | 102,00 | 2,00 | 2.328,00 |
| IC MARKETS slippage | 48,00 | 110,00 | 0,00 | 2.151,00 |
| INSTAFOREX slippage | 271,00 | 337,00 | 49,00 | 1.733,00 |
| NPBFX slippage | 116,00 | 180,00 | 11,00 | 2.056,00 |
| PEPPERSTONE slippage | 83,00 | 140,00 | 1,00 | 2.048,00 |
| SWISSQUOTE slippage | 206,00 | 217,00 | 1,00 | 613,00 |
| TITANFX slippage | 93,00 | 195,00 | 1,00 | 2.591,00 |
| USGFX slippage | 221,00 | 245,00 | 3,00 | 1.355,00 |
| WELTRADE slippage | 173,00 | 302,00 | 0,00 | 3.155,00 |
| XM slippage | 260.000 | 273.000 | 0.000 | 3.200 |
HFM Markets and Dukascopy are low-forex slippage brokers.
How to Lower Negative Slippage?
Setting a market range is one of the easiest ways to lower negative slippage. This way, you don’t have to be extremely cautious about fluctuations, as your order will be automatically canceled if the prices move beyond the range you have set. It would help if you discussed this with your broker. If you allow them for partial fills, only part of your order will be canceled, and you can still trade.
Another way of dealing with negative slippage is by using an ECN. An ECN, or Electronic Communication Network, offers automatic execution. Remember when we told you that you need to be quick to negate the losses caused by slippage? An ECN is precisely that. It executes a trade at a fast speed, thus reducing negative slippage.
If you are unsure or without a slippage broker, we suggest you steer clear of a highly volatile market, as understanding slippage will become a maze hunt for you.
Dealing with Positive Slippage
It is a positive when the bid increases in a short trade or the ask decreases in a long trade. However, don’t get encouraged by the term ‘positive’ as its literal meaning is not implied here. Slippage of any kind is still a deviation from what you had expected earlier.
If you are getting low slippage, talk to your broker and make an arrangement where you can execute the trade at the best price possible. There are set limit orders and entry orders that are positive slippage. Your brand to give you the exact advice on this matter.
How to Finding The Low- Slippage Broker
- Research: Start by doing a general internet search for Forex brokers and make a list of those that advertise themselves as offering low slippage.
- Liquidity Providers: Check who their liquidity providers are. Top-tier banks and liquidity providers generally offer better execution and lower slippage. In addition, brokers with multiple liquidity providers tend to provide better service regarding slippage.
- Order Execution Policy: Review their order execution policy. It should clearly outline its process when executing orders and state that it strives for the most minor slippage possible.
- Technology: What kind of technology do they use for order execution? Some brokers use advanced technology to execute orders quickly and minimize slippage.
- Regulation: Ensure a reputable financial authority regulates the broker’s priority. Regulated brokers are obligated to specific standards that protect traders.
- Customer Reviews: Read reviews from other traders. While these should be taken with a grain of salt, they can provide insight into others’ experiences with slippage on the platform.
- Demo Account: Use a demo account to access the platform and see if the slippage is acceptable. While demo accounts may not perfectly mimic live trading conditions, they can give you a general sense of what to expect.
- Customer Support: Contact customer support with any questions you may have. Their willingness to help and the clarity of their answers can be a good indicator of the quality of the broker.
- Transparency: Brokers should be transparent about their operations. They should be able to provide information about their slippage statistics or execution speed.
- Slippage Protection: Some brokers offer slippage protection features like guaranteed stop loss orders, which ensure that your trade will be executed at the price you set, regardless of market volatility.
Traders and investors hire brokers for various reasons. Some are looking for better trading platforms, while others want an expert opinion. However, if you are looking for a broom to help you deal with slippage, you should consider a few things before shaking hands.
Here is the ultimate checklist:
- Are they regulated?
This is the first thing you should check before signing up with any broker because this will cover you if things go south. Several brokers are operating but are not regulated. Not all of them are frauds, but as we mentioned earlier, trading is risky, and without a regulatory body, you cannot contest a claim against a broker—only those regulated brokers follow the guidelines of their regulatory bodies.
- What is their minimum deposit requirement?
Institutional traders invest a large sum when they enter the market; a considerably huge deposit requirement is not an option for them. However, this is not the case with retail and novice traders.
- What is their global position?
Brokers with an international presence and standing have more experience and exposure, giving you better advice on slippage. They also offer other services. For example, we are ple, trading more than one security, and offering better customer care services.
- How long have they been running?
If you are a new trader, I advise looking for an established and experienced broker. But, if you already know your strategy and are only looking for guidance, you can get help from new br. However, you should still look for a broker who has been operating for at least two years and has a clear record.
- How efficient is their customer support system?
Do thorough research about the customer service that your broker provides. You don’t want to end up on the other end of the phone where no one can understand you. The language barrier and timezone difference can be real in trading, and the market is volatile. Good customer support can help you deal with unforeseen situations.
- What will be their commission or fees?
Never procrastinate or discuss commissions or fees your broker will charge for their services. Maintaining transparency here is of the utmost importance so you don’t get unwanted surprises later on.
Conclusion
Understanding both positive and negative slippage can be tricky. If you think you are facing losses because of slippage, it is always better to turn to an expert. Just be careful while hiring a broker.
Remember, while low slippage is essential, it’s not the only thing to consider when choosing a Forex broker. Other factors like the broker’s reputation, fee structure, and customer service should also be considered.
Visit Low-Slippage Forex broker:
VISIT HFM
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
