Slippage in forex prop trading is the difference between the price you request for a trade and the price at which it is actually executed. It can occur due to various reasons, such as market volatility, market gaps, order size, order type, and order speed.
It is a “natural” part of trading.
It can be positive or negative; that is, it can work for you by increasing your profit or against you by increasing your loss.
Many prop traders are concerned about negative slippage; they wish to know how to reduce, control, minimize, or avoid it.
Although slippage cannot be completely avoided in trading, there are steps we can take to control or manage it.
In today’s blog post, we will talk about some of the ways you can mitigate, manage, or avoid too much slippage in your trades:
The prop firm that you trade with can have a significant impact on the slippage that you experience. Choose a prop firm with the lowest and most consistent slippage in the market, such as RebelsFunding. With positive feedback on Trustpilot from over 85% of satisfied traders, RebelsFunding is currently regarded as one of the best in the industry.
The market conditions can also affect the slippage that you experience. You should trade during liquid and stable market conditions, such as when the major market sessions overlap, when the market is trending, or when the market is calm.
You should avoid trading during illiquid and volatile market conditions. Avoid the market when it’s thin, ranging, or when there are major news or events. You should also be aware of the economic calendar and market sentiment and anticipate potential market movements or reactions.
The order type that you use can also affect the slippage that you experience. You should use the order type that suits your trading strategy and the market conditions. Different order types and order speeds have different advantages and disadvantages in terms of slippage.
Using a limit order may help reduce slippage.
In conclusion, although slippage is “unavoidable” in forex trading, it can still be minimized or reduced by trading with a reliable prop firm, avoiding high volatility periods, or using limit orders. By following these tips, you will enhance your results and satisfaction.