Brian S83 Adams#45

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What is slippage in forex trading and how can it be minimized?

Slippage occurs when an order is filled at a different price than expected, usually due to rapid price changes or low liquidity. For example, a trader placing a buy order at 1.2000 may get filled at 1.2003 during fast markets. Slippage can be positive (better price) or negative (worse price), though negative dominates in volatile markets. Causes include news spikes, thin liquidity, and delays in order routing. Institutions reduce slippage with smart order routers, direct LP access, and execution algorithms like TWAP or POV. Retail traders can minimize slippage by trading during liquid sessions (London/NY overlaps), using limit instead of market orders, and avoiding major announcements. Slippage isn’t always avoidable, but awareness allows traders to incorporate it into risk management. Treating slippage as a cost of doing business—and reducing it systematically—improves long-term profitability.