What Role Does Market Volatility Play in the Actual Execution Price versus the Quoted Price?

High market volatility, characterized by rapid and large price swings, significantly increases the risk of slippage. Between the time an order is placed and when it is executed, the quoted price can change substantially.

This time lag, even if milliseconds, is enough for the market to move, causing the execution price to deviate from the quoted price. In fast-moving markets, the latency of the exchange and the trader's connection also exacerbate this issue.

Volatility makes price discovery more challenging.