George619 Adams#88

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What is slippage tolerance and how does it affect forex trading?

Slippage tolerance refers to the acceptable level of deviation between an expected price and the actual fill price in a forex trade. For example, if you set a buy limit at 1.1000, but the market price fills at 1.1002, this is slippage. Retail traders typically set slippage tolerance in their trading platforms to avoid large deviations during fast markets. Institutional traders often use smart order routing to minimize slippage by directing orders to venues with better liquidity. The advantage of slippage tolerance is that it allows traders to control how much deviation they are willing to accept, but setting it too high can lead to unexpected losses during volatile periods. Retail traders should set reasonable tolerance to avoid “bad fills” during news events. Understanding slippage tolerance turns an unavoidable risk into a manageable part of the trading process.