What Is ‘Slippage’ in Financial Trading and When Does It Typically Occur?

Slippage in financial trading is the difference between the expected price of a trade and the price at which the trade is actually executed. It typically occurs in fast-moving markets, during periods of high volatility, or when trading large volumes of an illiquid asset.

When a market order is placed, if the price changes between the time the order is placed and the time it is filled, slippage occurs. This can be either positive (better price) or negative (worse price), though negative slippage is the common concern.