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Slippage is one of the most misunderstood concepts in forex trading. Yet, it’s
something that every trader experiences — especially during high volatility, news
events, or periods of low liquidity.
If you’re new to forex or trying to choose the right broker, understanding what
slippage is and how brokers manage it can help you avoid losses and improve
your trading outcomes.
In this article, we’ll explain slippage in detail, why it happens, and how different
types of brokers handle it. You’ll also learn how to minimize its impact on your
trades.
What Is Slippage in Forex Trading?
Slippage is the difference between the price you expect when placing a trade and the actual price at which your trade is executed.
It usually occurs when:
- The market is moving too fast
- There is low liquidity in the currency pair
- The broker cannot fill your order at the desired price
✅ Example of Slippage:
- You place a buy order at 1.1050
- The market is highly volatile, and your order gets filled at 1.1053
- The +3 pip difference is called slippage
Slippage can be positive or negative:
- ✅ Positive Slippage: Your trade is executed at a better price than expected
- ❌ Negative Slippage: Your trade is executed at a worse price than expected
⚙️ Why Does Slippage Happen?
Here are the most common causes of slippage:
- High Market Volatility: During news events like NFP or CPI reports, price
moves quickly, and liquidity providers can’t keep up. - Low Liquidity: Exotic pairs or off-market hours often have fewer
buyers/sellers, leading to delays in order filling. - Slow Internet or Platform Lag: Delays in order transmission can result in
missed prices. - Market Gaps: When the market opens after the weekend or holidays, price
gaps often occur. - Poor Broker Infrastructure: Low-tier brokers with bad execution engines
often cause artificial slippage.
How Different Types of Forex Brokers Handle Slippage
Not all brokers handle slippage the same way. Your experience will depend largely on the type of execution model the broker uses.
1. Market Maker Brokers (Dealing Desk)
- Market makers create their own pricing and may manipulate order
execution. - They might reject orders or requote trades during volatility.
- Slippage is often artificial and used to increase broker profits.
- They typically offer fixed spreads, but execution can be delayed.
Note: Some market makers apply slippage to your trades without transparency.
2. STP Brokers (Straight Through Processing)
- STP brokers route your orders directly to liquidity providers, not internally.
- Slippage occurs naturally depending on market conditions.
- Some STP brokers offer no requotes and partial fills.
- They usually don’t interfere with order execution.
Note: Slippage here is more transparent and market-driven.
3. ECN Brokers (Electronic Communication Network)
- ECN brokers give you direct access to the interbank market.
- Execution is ultra-fast, and slippage depends on real market depth.
- Orders are matched instantly with the best available price.
- Positive slippage is possible, especially in low-latency environments.
Note: ECN brokers don’t profit from your losses and offer the fairest execution.
How Top Brokers Handle Slippage
Here’s how some of the most trusted forex brokers manage slippage:
Exness
- Uses instant execution for standard accounts and market execution for raw
and pro accounts - Minimal slippage due to fast execution infrastructure
- Offers real-time order execution tracking
- Traders can set maximum deviation/slippage tolerance
IC Markets
- True ECN broker with raw pricing and ultra-fast execution
- Uses Equinix NY4 and LD5 servers for low-latency trading
- Slippage is fully market-driven and transparent
- Positive slippage is possible in fast-moving markets
XM Broker
- Offers no requotes and no rejections on standard and ultra-low accounts
- Orders filled at best available price during execution
- Allows users to define maximum price deviation
- Transparent policy regarding slippage during volatile market conditions
How to Minimize Slippage in Forex Trading
Even with the best brokers, slippage is inevitable — but you can reduce its impact with these tips:
- Avoid trading during major news events unless you’re prepared for
volatility - Use a broker that allows you to set maximum deviation for trade execution
- Choose brokers with ECN/STP execution and no dealing desk
- Trade during high-liquidity sessions (London & New York overlaps)
- Use limit orders instead of market orders if exact price is critical
- Make sure your internet and platform are fast and stable
✅ Final Thoughts: Slippage is Normal — But Broker Quality Matters
Slippage is a natural part of forex trading, especially in volatile or low-liquidity conditions. However, the way your broker handles it makes all the difference.
A trustworthy broker won’t manipulate slippage —they’ll provide transparent execution and give you the tools to manage it.
If you’re serious about your trading results, always choose a broker with a fast execution model, regulated status, and ECN or STP infrastructure.
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