Things you need to about Forex slippage

The Forex market is the largest financial market in the world. More than $4.5 trillion is traded each day in Forex. Just by seeing the number, you should have a clear idea of how vast this market is. Every day, the number of retail traders is rising at an exponential rate because many high-end brokers are offering leverage trading account to retail traders. But having access to a high leverage trading account doesn’t mean you will be making tons of money just like the elite traders at Saxo. You have to develop a unique strategy to deal with the complicated price movement.

Being a fulltime trader, you must learn the importance of a professional trading environment. You might think the high-end brokers are charging higher fees. Though it’s true if you trade with the low-end brokers you will never get a professional trading environment. You are going to lose a big sum of money due to the slippage problem.

Today, we are going to give you critical information regarding the Forex market slippage. Read this article carefully because it will help you to ensure a premium trading environment.

Definition of slippage

To understand the term slippage, we need to give you a simple example. Let's say you are trying the buy a EURUSD pair at price of 1.1220. Right after hitting the buy button, you notice that the trades have been executed at a price of 1.1223. So the difference of 3 pips is the slippage. Some brokers in the trading industry often give new pricing to the trades when they hit the execution button. Such new pricing is often known as price requotes. But if you trade the market with high-end brokers like Saxo (click here), you are never going to face such problems.

Such slippages are also very common when you close a trade. When you set predefined stop loss and take profit, the traders might not get closed at your desired price level. You might find few deviations in the closing price which is also known as slippage.

So, how to deal with the slippage?

To deal with the slippage you need to be careful with your money management plan. Make sure you are not going to lose a big portion of your trading capital when the trades close with few pips deviation. Most of the time, traders need to think about 10 pips deviation when they calculate potential stop loss and take profit. Though it’s very advanced stuff, you can easily deal with such problems by using the demo account. On the other hand, you can start trading the market with elite brokers like Saxo and stop thinking about such a complicated trade execution process.

Finding the reputed broker

You might think by finding a well-reputed broker you can easily solve this problem. To be honest, you can’t completely save yourself from heavy slippage in the Forex market. But high-end brokers like Saxo can take care of this problem in a very precise manner. To avoid slippage you should stop trading the major news or in the volatile market. Try to execute the trade at a stable market condition so that you don’t have to deal with the precise price point. Look for reputed brokers who have years of experience in offering high-quality service.

Before you invest your money with a broker, you need to talk with their customer support team. Ask them about their offered trading environment so that you don’t have to deal with a low-end trading platform. If necessary, ask the professional traders about their preferred broker. Most of the time, you can get your desired answer in the public trading community. Unless you are certain about your broker, you should never invest a big sum of money. So, think twice before you invest any money with a new broker.

Leave a reply