Glossary
What is Slippage? Meaning, Example & Why It Matters
The difference between the price you expected for a trade and the price at which it actually executed.
Slippage happens when your order executes at a different price from the one you saw or expected. It is common with market orders and stop-loss market orders, especially in fast-moving markets or illiquid instruments where there is not enough quantity at the best price. Slippage can be positive, but it is more often a cost.
Why Slippage matters to you
Slippage does not appear as a line on your contract note, which is why it is called a hidden cost. For active traders, especially in options and small-cap stocks, it can cost more than brokerage over time. Wide bid-ask spreads, large order sizes and volatile moments like market open or news releases all increase it.
It also matters for evaluating strategies. A back-tested strategy that assumes trades fill at the last traded price may look profitable but lose money after real-world slippage. Algo traders in particular should account for it when measuring performance.
Practical tip: use limit orders where possible, trade liquid instruments, and avoid placing large market orders during volatile moments. Check market depth before trading to see how much quantity is available at each price level.
Example: Illustrative only: if you place a market buy order expecting ₹100 per share for 500 shares but it fills at an average of ₹100.40, slippage costs you about ₹200 on top of brokerage and charges.
See it in rupees: every charge and tax on a real trade, at every broker. Open the brokerage calculator
Related terms
- GlossaryMarket Order
An order to buy or sell immediately at the best price currently available in the market.
- GlossaryLimit Order
An order to buy or sell only at a specified price or better, giving you control over the execution price.
- GlossaryOrder Execution Latency
The time delay between placing an order and it being received, executed and confirmed by the exchange.
- GlossaryStop-Loss Order
An order that triggers a buy or sell once the price reaches a set level, used to limit losses on a position.
Frequently asked questions
Is slippage charged by my broker?
No. Slippage is a result of market prices and liquidity, not a fee, though it still affects your total cost.
Can slippage be avoided completely?
Not completely, but limit orders and trading in liquid instruments can reduce it significantly.
Does slippage only affect large traders?
It affects anyone, but larger orders and illiquid instruments tend to see more of it.