What is meant by Slippages and how can I avoid them?

What is meant by Slippages and how can I avoid them?

Slippages refer to a situation in which a trader’s order placed is executed at a different price than he initially intended. This happens when placing market orders as there is an ever-changing Bid/Ask in these highly volatile markets.

Slippages cannot be avoided but reduced to a maximum extent:

  • Usage of Limit Orders instead of Market Orders can be beneficial.
  • Placing basket orders (refer to this article) can reduce slippages, especially while hedging.

Note: Slippages can also happen in extremely Low volatile situations as there will be immense differences between Bid/Ask.

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