Slippage
The difference between the price a trader expected at order entry and the price the trade actually filled at — usually worse than expected in fast markets.
Definition
Slippage is the gap between the intended execution price and the actual fill. A trader sends a market order to buy EUR/USD at 1.0850; by the time the order reaches the liquidity provider, the price has moved to 1.0852 and the fill prints there — 2 pips of slippage. Slippage can be positive (fill better than expected) or negative (worse), but negative slippage is dramatically more common, especially in fast markets: around news events, at session opens, during unusual volatility spikes, and on stop-loss orders that trigger during a gap. Some prop firms simulate slippage in their pricing engine; others pass through the liquidity provider's actual fills.
Example
Why It Matters
Slippage is the source of drawdown-breaching losses that exceed the trader's worst-case calculation. A position that was supposed to cap at a 30-pip loss instead closes at 45 pips — on a tight daily drawdown, those extra 15 pips can be the difference between a survivable day and a breach. Traders on tight drawdown accounts should size positions assuming slippage will be 2-3x wider than normal during news events, or avoid positioning through high-impact events entirely. Simulated funded accounts can be more generous or stricter with slippage than live markets — worth testing on a small position before committing size.