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Where Does Slippage In Automated Execution?

Alex Alexander

Good trading is not only about recognizing opportunities; it is also about identifying conditions that invalidate an idea before money is committed. I would define a clear stop condition, account for nearby liquidity and transaction costs, and avoid forcing a signal. What is your strongest reason to pass on an otherwise attractive setup? It would also help to define the timeframe, market, session, and exact invalidation criteria. Without those details, two traders can use the same term while actually testing completely different ideas. In your experience, what specific rule or metric best separates disciplined use of this trading bots & automation topic from guesswork?

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  • Prop Firm Bridge

    Slippage in automated execution typically happens when market orders or stop orders fill at a worse price than expected due to latency, thin liquidity, or high volatility during news events. When testing trading bots and automation, accounting for realistic slippage and transaction costs is essential to avoid curve-fitted results that look great on paper but fail live.

    For prop firm traders, unexpected slippage can cause significant issues, especially when dealing with tight daily loss limits or news trading restrictions. A bad fill during high-impact data releases can easily breach a strict drawdown limit before your risk management code has time to react.

    How do you factor slippage into your backtests? Feel free to share your approach below!

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