Understanding Slippage and High-Impact News Events
Slippage is a common occurrence in trading, especially under certain market conditions. Here’s a brief overview.
What is Slippage?
Slippage occurs when the actual execution price of a trade differs from the expected price. This is often due to rapid price changes in the market.
Why Does Slippage Happen?
Inefficiencies in the market may push the price past your stop loss (SL), resulting in execution at the next available price.
Causes of Slippage:
Highly Volatile Markets: Prices can move quickly and unpredictably.
High-Impact News Events: Major announcements can cause sudden price swings.
Market Rollover: Transition periods between trading sessions can create price gaps.
Trading During High-Impact News Events:
While trading during news events is permitted, be aware of these risks:
SL and TP Not Triggering: Rapid price changes can skip over your SL or TP or may fill at unexpected prices.
Increased Spread: Bid-ask spreads can widen significantly.
High Slippage: Likelihood increases due to swift price movements.
Common Examples of High-Impact News Events:
Economic Reports: Non-Farm Payrolls (NFP), GDP releases, CPI reports.
Central Bank Announcements: Interest rate decisions by the Federal Reserve, ECB, etc.
Geopolitical Events: Elections, trade negotiations, major policy announcements.
We hope this helps you understand slippage and manage trading during high-impact news events. If you have any further questions, please feel free to reach out to our support team.