Slippage (finance)

With regard to futures contracts as well as other financial instruments, slippage is the difference between where the computer signaled the entry and exit for a trade and where actual clients, with actual money, entered and exited the market using the computer's signals. Market impact, liquidity, and frictional costs may also contribute.

This article is about the financial concept. For other uses, see Slippage.

Algorithmic trading is often used to reduce slippage, and algorithms can be backtested on past data to see the effects of slippage, but it is impossible to eliminate.

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