Why slippage happens (and it’s not always because of news)

Slippage is an unpleasant surprise for every trader.

Imagine this: you want to sell at 20, but your order gets executed at 17. Ouch.

Nobody likes that.

One of the main reasons this happens is simple - there was no 20 available. Maybe the market jumped from 40 straight to 17 because, let’s say, Trump tweeted something spicy again. Price gaps like that can make your perfect plan fall apart in milliseconds.

But here's the thing - even if the market is relatively calm, slippage can still sneak in. Why? Because of something called market depth.

In financial markets, there's rarely just one execution price available for an asset at a chosen point of time. In fact, there can be different prices depending on how much you're trying to buy or sell.

Kind of like shopping for apples: buying one apple is $1, but buying 1,000 might get you a better deal (if it's the supermarket).

But here’s the twist: in financial markets, the more you want to trade - the worse your price gets.

Yep, backwards from real life.

This happens because the market works on a supply/demand ladder, and prices are stacked by volume. The more you want to sell or buy, the deeper you have to go into that ladder - and that’s where the worse prices live.

This full view of prices and volumes is called market depth.

Let’s say you want to sell 100,000 EURUSD.

Here’s what the current market depth looks like for sell orders:

Now, most retail platforms (the ones regular people use) only show you the best price - in this case, 1.0571. That’s called the “top of the book.”

So, when you go to sell your 100,000, you think “Sweet, I’m getting 1.0571!”

Except… not really.

Because that price is only good for 50,000 units.

To sell 100,000, your order spills over into the next level, and maybe even the next one. So, your average execution price will be lower. And there’s your slippage - even with no news and no chaos.

Slippage feels unfair, but in reality, it’s just how the market works.

The deeper your order has to go into the market, the more likely it is that your price will slip. It’s not a bug or malicious intentions - it’s just how liquidity and volume play together.

Fun fact: it’s one of the most natural things in trading. It just doesn’t show up clearly in the retail platforms we all use.