Debunking Another Forex Myth — There Is No Slippage In Forex Trading

Forex trading myths are everywhere these days.  Due to the incredibly increased popularity of Forex trading it seems that everybody and their brother is jumping on the Web to give you Forex advice.  There's something that you may or may not know especially if you're a new Forex trader.  You simply cannot trust all the information about the currency markets that you see through searching on the web.   

You see, all Forex information is not created equal.  Although there are some people that actually know what they're talking about,  the internet seems clogged with many people that don't have a clue about what real-world trading is all about.  Therefore it is up to you to take much of what you read with a grain of salt and exercise caution when taking free daily Forex advice from anyone.

One of the many things that you'll see spoken of again and again is the incredible liquidity of the Forex market usually with some mention of how many trillions of dollars per day are being traded.  Along with statements of how liquid the Forex market is you will typically hear that the advantage of this liquidity over trading other markets such as stock and futures, is that you are able to get into and out of a trade with virtually no slippage. Slippage is basically the difference between the price you placed your order at and where you were filled (not counting the spread).

In a "no slippage" transaction your trade would be filled at your order price (not counting the spread). Something very important for you understand is that this simply is not the case in each and every transaction. Let me give you a recent real-world example.

An associate of mine was recently short the EURUSD and using the Forex broker FXCM.  A news report came out while they were in the trade and their protective stop was "run" by over 140 pips as the EURUSD bolted upward.  This is a simple example that there absolutely, positively is slippage in the Forex market and you will not always get filled at your price.  In fact, the reality of Forex trading is bad there may be times when you don't get filled anywhere near your price.  In just that one trade in the example above that 140 pips of slippage is the equivalent of 46 trades each with the spread of 3 pips.