Does the Use of Leverage in Derivatives Trading Amplify the Effect of Slippage?

Yes, the use of leverage significantly amplifies the effect of slippage. When trading with leverage, a small price movement is magnified in terms of the profit or loss relative to the initial margin.

If slippage occurs, the magnified loss due to the unexpected execution price can quickly erode the trader's margin, potentially leading to a forced liquidation or margin call on the leveraged position.