What is it in finance?
Slippage is a term in the area of finance that describes a situation in which shares or other financial instruments do not deal with the expected price. There are a number of reasons why a slip may occur and for some traders it can become a very serious problem. People can use different techniques to avoid slip or reduce the risk of experiencing this unpleasant problem. The anticipation and management of differences between expected and real prices is an important aspect of a successful trader or broker. Sometimes, at a time when you need to write an order, the price and slip will drop. No one will fill the order at the expected price and as a result the order must be sold at another available price, causing a slip. Brokers working on behalf of their customers want to avoid these situations because they want to get the best possible solutions for people.
The slip usually occurs in response to market pressures. On whatOli market, which is fast or volatile, prices are changing rapidly and even experienced and qualified brokers may have trouble maintaining a step. Markets can radically swing in response to things such as violations of messages, especially financial reports, such as release of new information about the central bank rate. The brokers must try to predict intelligence events that could cause changes in the market to be one step ahead.
High volume of sales orders can also generate slip. If many people try to sell shares at a given price, buyers can start this price and push lower. Subsequently, people who write orders for a higher price may not be able to sell prior to the price drop and are therefore forced to take a lower price.
Every broker or merchant approaches the problem of the slip differently, depending on the market in which he is involved, on the needs of all clients who can participate and experience. Good merchants and brokers are highly flexible, withThe ability to anticipate changes and quickly adapt to changes to use the market conditions. Failure to comply with the step may result in a stuck with the wrong end of the trade and on an extremely volatile market it is possible to achieve relatively large losses in a single day.