Slippage (finance)

Slippage (finance)

With regards to futures contracts as well as other financial instruments, slippage is the difference between estimated transaction costs and the amount actually paid. Brokers may not always be effective enough at executing orders. Market-impacted, liquidity, and frictional costs may also contribute. Algorithmic trading is often used to reduce slippage.

Leveraged portfolio

A portfolio of securities that is leveraged with borrowed funds will encounter the slippage that comes with how the portfolio increase/decrease multiply (see leverage (finance)).


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