Stock Market Glossary
Slippage
Difference between the planned and actually realized execution price.
In brief: Difference between the planned and actually realized execution price.
Meaning in practice
Slippage occurs in volatile or illiquid markets, often during market orders or when stops are triggered. It is often ignored in backtests and is one of the most common reasons why a strategy performs worse in reality.
Context for investors and traders
For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.
How to use this in practice
Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.
What to keep in mind
Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.
