Slippage is the difference between the price you set for an order and the actual execution price. It can occur due to market volatility, liquidity, order size, or execution speed. While most orders are filled close to your requested price, slippage may cause the execution price to vary.

Types of Slippage:

1. Positive Slippage – The order is executed at a better price than expected. This can result in higher profits or reduced losses.
   • Example: You set a take profit for a 1-lot EUR/USD buy order at 1.07260, but it executes at 1.07265. The positive slippage is $5:
     $(1.07265 − 1.07260) × 100,000 = 5 USD$(1.07265−1.07260)×100,000=5USD
2. Negative Slippage – The order is executed at a worse price than expected. This usually happens during high volatility or slow execution, potentially increasing losses.
   • Example: You set a stop loss for a 1-lot EUR/USD buy order at 1.07260, but it executes at 1.07255. The negative slippage is −$5:
     $(1.07255 − 1.07260) × 100,000 = −5 USD$(1.07255−1.07260)×100,000=−5USD

Understanding slippage helps traders manage risk and set realistic expectations in volatile markets.