What is Slippage in Forex?Real explanation and practical cases

[CaroCars]

Once I talked to the support of a Forex broker and they told me that Slippage occurs due to the way Stop and Limit orders work.They explained the following: If you open a purchase in 1,5001, you put a SL in 1,4901 and a TP in 1,5101, if the price drops, the SL is activated by playing 1,4901, but it is executed at the first available price, which can be several pips below.On the other hand, the TP being above the current price is immediately launched and only expects someone to take the other part, so supposedly there is no Slippage.Then, in a sale it would be the other way around: the SL is launched to the one, because the high price has not been reached, and the TP is activated when the price falls enough.Therefore, according to that, the Slippage could happen in the TP but not at the SL.All of that makes sense ... but the reality is different.With my current broker, which is promoted as ECN and is quite respected, I have had positive and negative slippage both in SL and TP, in purchase and sale orders, just as they should not happen.I would like to know how the execution of orders really works.If anyone knows how SL, TP, purchases and sales are really processed, please explain it.

[CaroCars]

Nobody knows how orders are executed?No I am surprised that 95% lose money in this business.

[CaroCars]

Thanks for your answer, I read the PDF you shared and it's very good.But it still does not explain the positive Slippage in a purchase TP.What did you mean that using STOP orders both in SL and TP?I use normal TP and SL in Metatrader.In a purchase, the TP would be a limit order, right?Look at this example of positive Slippage in a purchase TP that I don't understand.According to the broker, this should not happen, and if I understood your pdf well, you say the same.Could you review what happened in this case?(In this Trade I obtained 3 more profit than what I had put as TP, which benefited me, but I want to learn why these situations occur

[coSesy]

I do not know how exactly the trading with MT4 works, but a stop order is basically a market order that is not executed until the target price is activated.If you sell, your SL will be an Buy Stop order above the market, and your TP will be a Buy Stop below the market.In both cases, you are using a Buy Stop order, that is, an order that becomes a market purchase order when the price is reached.The same applies to the reverse in long positions.As market orders are executed at the best available price, they are vulnerable to slippage, since the price can move before the execution is completed (or before your broker process it

[BEsSTORAXR]

Good explanation.Thank you!

[WHEsTNUCO14]

I have an example in a real operation where I did not understand how Slippage happened.It was at GBP/JPY with a automatic 20 pips trailing stop on a short sale.At 8:30 am et The price shot up to 158,233 for unemployment news in the US. The minimum that marked the candle was 158,082 and my trailing stop was correctly put at 158,271 according to the history.But that spike was 4 pips below the level of the trailing stop.So how can the stop and executed in 158.31 be activated if the price did not arrive?I did not complain with the broker because it is just a micro ECN account.But I want to understand mechanics, I don't come to throw up.It is always better to know how to claim if something strange happens.If someone understands this case, I would appreciate an explanation.I no longer operate in Forex.I am looking for fixed work.

[esSesunycrus]

I suspect that your graph shows the IDB price, but the Stop Buy order is activated with the ASK.With important news, the spred can open a lot, so although the IDB did not reach the stop, the ASK could have touched it.

[duogaribua]

Most start operating with brockers in MT4 and never understands how the market really works.I think that is the reason why they lose.The mechanics is simple: there are prices, and in each there are orders of a certain volume.As this is a decentralized market (OTC

[TesbSttng]

I did not understand everything you said, but with what you explain, to use a fixed spread would avoid this situation?The only thing I know about the Slippage is that it occurs when the order will execute.It only happened to me once, with usdjpy.If I use fixed spred, theory would not even open even with strong news.It's right?

[TesroyTa]

Yes, you are understanding it well.When you sell, you do it to IDB;When you buy, Al Ask.If you are short, your SL is a purchase order.If the spred expands, the ASK rises and the low IDB.If the ASK reaches your SL level, it is activated, although the IDB has not touched that price.If your graphic only shows the IDB, it will seem to you that it never reached that level, but they were executed.If you show the ASK in the graph, you will see something else.The fixed spred could avoid that, although I don't see how they could keep it stable during volatile events.Maybe it helps to avoid Stops activated by the Spread, but surely there are many �requotes� or directly reject your orders.Able only fixed in normal conditions ... and during news, they upload it the same, as Oanda does with fixed 50 ticks in some fixed income CFDs.

[esSborTkg12]

I assume that it was my mistake to put a purchase order so close to GBP news (manufacturing production m/m at 4:30 am et

[GaaungiT]

Hello, I was also in that long operation, I published it in my diary.I had the SL to 4 points and, after climbing a little, the news spike jumped it to me.I lost more than 40 pips, very expensive.The same, my system is designed to operate during news, and in the long run it has been better than bad.Although this was the second strong blow in a short time.I can avoid this ceasing to operate in news ... or pay for guaranteed sl, I think it costs 7 more pips from Spred.I have not decided yet.

[sesres]

Before the data, I placed a sales order in 1,6026 just before the news of the GBP.He slid to 1,5998 in 1-5 seconds.Sometimes it is so, my price does not match any order or stop of the broker liquidity supplier, and simply jumps to the next level.

[resNraS]

Interesting that you bought there.Seeing the operation later, it seems to me that it was a bad idea to enter so close to news.I have a rule to avoid that, but that day I was distracted and broke it.Finding a guaranteed stop can give you more confidence to repeat that error.I do not recommend it, but well, it is your decision.

[CUGWSEsTARTEs]

The price no longer moves so much after the news as before.The central banks continue to print, and the market does not expect them to change soon.That is why the response to economic data is much weaker.If you have a reaction of 20 pips and a slippage of another 20, that is no longer trading ... it's chance.

[SuSuTOorwz]

I agree.While writing the previous post I thought just that.

[nuca12]

He operated with news until 2007. They were good times.Zero slippage and reactions of more than 100 pips in NFP.

[94Trwz]

Use a very correlated currency (95%+

[AxresyEskesChaku]

Can you explain that better?I do not understand how it helps to use a pair correlated with USD for the NFP.