How Does the ‘Margin’ Requirement for Derivatives Trading Interact with Execution Price and Slippage?
Margin is the collateral required to open and maintain a leveraged derivatives position. While margin doesn't directly cause slippage, the high leverage it enables means that a small amount of slippage can have a disproportionately large impact on the trader's account equity.
A large negative slippage event can quickly lead to a margin call or liquidation, as the adverse price movement eats into the relatively small margin amount much faster than in a non-leveraged trade.
