Positive Slippage vs. Negative Slippage: What’s the Difference?

Slippage is the difference between the requested price, or the price at which an order is triggered, and the actual execution price. An order may be filled at a better or worse price than the reference price, so Slippage should not automatically be viewed as negative.

The result must be interpreted according to the direction of the transaction because Buy and Sell orders have opposite definitions of what counts as a “better price.”

What Causes Slippage?

Slippage occurs when the price available for actual order matching differs from the requested price at the time the order is submitted or triggered. Factors that may contribute include rapid price movements, liquidity available at different price levels, order size, trading session conditions, and the time required for the system to receive and process the order.

For example, suppose EUR/USD is trading near 1.10000 when a Buy order is submitted. Before the order is filled, the available Ask price may move to 1.10005 or 1.09995. The execution price may therefore differ from the initial reference price even if only a very short period passes between order submission and execution.

Slippage can also occur when closing a position and with orders such as Stop Orders or Stop Losses. When the market reaches the trigger level, the order enters the execution process, but this does not necessarily mean it will be filled exactly at the trigger price. If the market moves rapidly through that level, the price available for actual matching may already have changed.

Order conditions and execution processes may vary depending on the instrument, account type, platform, and service provider. Traders should therefore review the terms published for the specific system they use. For example, when reviewing the conditions of GOC Prime broker, execution details should be referenced directly from the provider for the relevant account or platform rather than assuming that Slippage behaves the same way as it does with another provider.

What Is Positive Slippage?

Positive Slippage occurs when the actual execution price is better than the reference price when considered in relation to the direction of the transaction.

The word “Positive” does not necessarily mean that the numerical price increased. It means that the execution price was more favorable for that particular order.

For a Buy order, a lower price is better. If a Buy order is requested at 1.10000 and filled at 1.09995, the difference is:

1.10000 - 1.09995 = 0.00005

If EUR/USD is quoted to 5 decimal places and 1 Pip equals 0.00010, then a difference of 0.00005 equals 0.5 Pip.

The Buy order executed at 1.09995 therefore received a price that was 0.5 Pip better than the reference price.

For a Sell order, the principle is reversed. If the reference price is 1.10000 but the order is sold at 1.10005, the higher price of 0.00005, or 0.5 Pip, is more favorable for the seller because the transaction was executed at a higher price.

Therefore, an execution price that moves lower may represent Positive Slippage for a Buy order but Negative Slippage for a Sell order.

What Is Negative Slippage?

Negative Slippage occurs when the actual execution price is worse than the reference price.

For a Buy order, this means the order is filled at a higher price. For a Sell order, it means the order is filled at a lower price.

For example, suppose a Buy order is requested at 1.10000 but executed at 1.10008. The difference is:

1.10008 - 1.10000 = 0.00008

If 1 Pip equals 0.00010, then a difference of 0.00008 equals 0.8 Pip.

This Buy order was therefore filled 0.8 Pip above the reference price, which is less favorable for the buyer.

Conversely, if a Sell order has a reference price of 1.10000 but is filled at 1.09992, the actual execution price is 0.00008, or 0.8 Pip, lower. This represents a less favorable price for the seller.

The key principle is to evaluate how the price movement affects the direction of the transaction rather than simply looking at whether the numerical price moved higher or lower.

However, there is no guarantee that Positive or Negative Slippage will occur at any specific frequency or under any particular market condition. Actual results depend on market prices, liquidity, and the execution process at that moment.

Example: Requested Price of 1.10000 but a Different Execution Price

Assume EUR/USD is quoted to 5 decimal places, where 1 Pip equals 0.00010, and the reference price for a Buy order is 1.10000.

If the order is executed at 1.09995, the actual price is lower by 0.00005.

The calculation is:

0.00005 ÷ 0.00010 = 0.5 Pip

This means the Buy order received a price that was 0.5 Pip better than the reference price.

If the order is executed at 1.10008, the actual price is higher by 0.00008.

The calculation is:

0.00008 ÷ 0.00010 = 0.8 Pip

This means the Buy order received a price that was 0.8 Pip worse than the reference price.

For a Sell order, the interpretation is reversed. Selling at 1.10008 when the reference price is 1.10000 is 0.8 Pip more favorable, while selling at 1.09995 is 0.5 Pip less favorable.

The number of digits used by the Symbol should always be checked before calculating Pips. In this EUR/USD example with 5 decimal places, a movement of 0.00001 equals one-tenth of a Pip, while 0.00010 equals 1 Pip.

Other instruments may use different decimal formats or Tick Sizes, so the Pip conversion used for this currency pair should not automatically be applied to every asset.

Why Can Slippage Occur in Both Directions?

Slippage can occur in either direction because market prices may move higher or lower between the reference price and the moment the order is executed.

If the available matching price moves in a favorable direction, Positive Slippage occurs. If it moves in an unfavorable direction, Negative Slippage occurs. There is no guarantee that either direction will occur more frequently.

The same principle applies when closing a position.

For example, a Buy position must normally be closed through a Sell transaction. If the intended closing price is 1.10500 but the Sell transaction is executed at 1.10505, the higher selling price is more favorable.

If the transaction is instead executed at 1.10490, the lower selling price is less favorable.

Slippage when closing a position should therefore be evaluated according to the direction of the transaction used to close the position, rather than only the direction of the original position.

Slippage should also be distinguished from Spread, Requote, and Commission.

Spread is the difference between the Bid and Ask prices at a particular moment, while Slippage is the difference between the order's reference price and its actual execution price. They are therefore separate components of pricing and trading costs.

A Requote occurs when the original price cannot be executed under the system's execution mechanism and a new price is offered for consideration. This differs from Slippage, where the order may be filled at a price that differs from the original reference price.

Commission is a fee charged according to the account's pricing structure. It is not a difference between the reference price and the execution price.

When evaluating an order, Slippage should therefore be considered separately from Spread, Requote, and Commission, while also checking the Buy or Sell direction, the Symbol's Digits, Pip size, and specific execution conditions.