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Currency prices tend to move very fast during such highly volatile market conditions. The risk of slippage is usually very high when trading the news. Slippage occurs when the price you intend to enter or exit the market is different from your actual transacted price. Know the forex market.

Slippage is the biggest problem when the market moves fast. Placing stop or market entry orders under such times do not guarantee anything. These orders do get filled but mostly at different prices than you had intended.You must develop your own mechanical forex trading system.

Many market makers will wait till after the big move is over. Then they will fill your entry order. Sometimes, these entry orders may even get filled past your stop loss or profit target. This means that you would be left with immediate net loss.Discover a revolutionary new forex robot.

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Before filling your entry order with wide slippage, many brokers will fill your stop loss or take profit order. It is a trick that many forex brokers use in order to make profit by filling your position with a negative spread.

Let’s take an example. Suppose you have placed your long entry stop for EUR/USD at 1.2564. Your profit limit is 1.2594. The forex broker may first fill your take profit at 1.2594 and then fill your long entry stop at 1.2604 with a 40 pips slippage.

Even though your trade would have resulted in a profit if filled at the prices you wanted. But now you have a net realized loss. The forex broker may also fill your stop loss order first if the trade goes against you. Then fill your entry order with slippage after that so as to widen their profits.

Suppose, you had placed your long entry stop at 1.2564. You place your stop loss at 1.2544. The broker could first fill your stop loss at 1.2544. Then fill your long entry stop at 1.2594 with a slippage of 30 pips. You now have a net loss of 50 pips due to slippage instead of planned 20 pips loss.

The more you stand to lose and the more the forex broker stands to make a profit, the larger the slippage you experience. You should know as an individual trader that during news when the market moves fast, your orders will be kept pending till you get stopped out or your profit limit is reached. Some forex brokers add slippage to any of your orders to increase their profits

Many traders readily accept the risk of slippage. They consider slippage as one of the realities of trading the news. However, they should know that slippage can eat up a huge chunk of profits. In the end slippage can affect their overall profit/loss. You can overcome the problem of slippage through the use of stop-limit entry order. You can read more on it in the next article!

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