Slippage

Slippage is the gap between the price you expected and the price you actually got filled at.

A quick example

What it means for you

It is a hidden cost of trading, worst in fast or thin markets.

Picture this

A trader sees a fast-moving stock at $40 and clicks a market order. Between the click and the fill — under a second — the stock jumps to $40.60, and 500 shares cost $300 more than expected. The commission was $1; the slippage was $300. In a liquid mega-cap the same order would have filled within a cent. The scenario is why professionals treat slippage as the real trading tax: it is invisible, it scales with urgency and illiquidity, and it quietly eats the profits that commissions never touch.

Common mix-ups

It can dwarf a commission, especially on large or illiquid orders.

How to apply it

Minimise slippage with limit orders, trade liquid names, and avoid entering during spikes. For large orders, consider splitting into pieces; the market impact of a single giant order is the worst slippage of all.

Key takeaway

Slippage is the hidden tax on trading: the gap between the price you expected and the price you actually got, invisible on your statement and often larger than any commission. It hits hardest in fast moves, thin stocks, and large orders, and it compounds for frequent traders. Minimise it with limit orders, liquid names, and calm conditions, and split big orders into pieces. The price you see is not the price you pay; the difference is slippage.

Definitions reviewed by the Investing Glossary editorial team.